Exam 2: Economic Models

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. The opportunity cost of moving from producing ONLY wheat to producing at point D is _____ tons of wheat.

Consider a nation with a large economy, like the United States, and a nation with a small economy, like the Dominican Republic. How can the United States, with absolute advantage in production of almost all goods, benefit from trade with the Dominican Republic?

A high-school graduate who gets a college degree is adding to the economy's stock of:

The models used in economics:

An economic model is a simplified version of reality that is used to analyze real-world economic situations.

Use the following to answer questions : Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. This production possibility frontier is:

Use the following to answer questions : -(Table: Production of Good Z and Good X in Urbanville) Look at the table Production of Good Z and Good X in Urbanville. If this table shows the production possibility frontier and Urbanville is producing at combination F, what is the opportunity cost of a move to combination E?

Use the following to answer questions : -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. If the economy is producing at Y, the opportunity cost of producing at Z is _____ units of consumer goods per period.

Which of the following is a normative statement?

Use the following to answer questions : Figure: Production Possibility Frontier Curve for Tealand -(Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand can produce at point E only if the government:

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. The opportunity cost for Tom to move from point A on the curve to point B is:

In the factor market, firms buy goods and services.

In the circular-flow diagram firms buy _____ in the _____ market.

Use the following to answer questions : -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. The production of eight units of consumer goods and two units of capital goods per period would result in:

The basis of the circular-flow diagram is that:

It is impossible for economists to use computers to simulate how the economy works.

The economy with the lowest opportunity cost of producing a particular good is said to have:

Positive economics:

Use the following to answer questions : Figure: Guns and Butter -(Figure: Guns and Butter) Look at the figure Guns and Butter. If the economy is operating at point B, producing 16 guns and 12 pounds of butter per period, a decision to move to point E and produce 18 pounds of butter:

Use the following to answer questions : Figure: Production Possibility Frontier Curve for Tealand -(Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand is producing at point C on its production possibility frontier. What is the opportunity cost of increasing the production of tea from 20 million cups to 30 million cups?