Exam 2: Economic Models

If Mary accepts a job as a nurse, she has sold a factor of production in the factor market.

Use the following to answer questions : -(Table: Comparative Advantage I) Look at the table Comparative Advantage I. The opportunity cost of producing 1 box of cell phones for Finland is _____ box(es) of herring.

The production possibility frontier illustrates that:

In the circular-flow diagram, the product market is where:

Use the following to answer questions : Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. A movement from point C producing 12 cars and 16 computers per period to point B means a _____of _____ cars and a _____ of _____ computers per period.

The opportunity cost of production:

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A and wants to produce at point B, it must:

Use the following to answer questions : -(Table: Wheat and Aluminum) Look at the table Wheat and Aluminum. The United States and Germany can produce both wheat and aluminum. The table shows the maximum annual output combinations of wheat and aluminum that can be produced. Based on the table:

Coworkers Yvonne and Rodney are washing dishes and sweeping the floors of the store. They know that to finish both tasks as quickly as possible, each of them should focus on just one task, but they don't know who should do what. Yvonne and Rodney should determine which one:

Use the following to answer questions : Figure: Production Possibilities and Circular-Flow Diagram -(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram there is a significant decrease in the amount of labor flowing to the firms that produce coconuts. If all other variables remain unchanged, this adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward:

Economists use models to explain real-life situations because:

In the circular-flow diagram firms receive money for _____ in the _____ market.

If the production possibility frontier is a straight line:

The basis of the circular-flow diagram is that the money flowing into each sector or market is greater than the money that flows out.

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. Which point or points represent(s) an infeasible combination of coconuts and fish?

Use the following to answer question : -(Table: Fish and Coconut Production Possibilities) The table shows the maximum amount of fish and coconuts that Tom and Hank can produce if they produce only one good. Tom produces and consumes nine fish and two coconuts, and Hank produces and consumes three fish and two coconuts. Now they decide to engage in trade. Which of the following statements is INCORRECT?

If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will:

If the opportunity cost of manufacturing automobiles is lower in the United States than in Britain and the opportunity cost of manufacturing airplanes is higher in the United States than in Britain, then the United States will:

Economists generally believe that a country should specialize in the production of a good or service if:

Use the following to answer questions: Scenario: Countries A and B Two countries, A and B, produce two goods, wheat (W) and steel (S). Each has a linear production possibility frontier in both goods. If country A spends all of its available resources to produce wheat, it can produce 500 tons of wheat and no steel. If it uses all of its resources to produce steel, it can produce 250 tons of steel and no wheat. If country B spends all of its available resources producing wheat, it can produce 400 tons of wheat, and if it spends all of its resources on the production of steel, it can produce 400 tons of steel. -(Scenario: Countries A and B) Look at the scenario Countries A and B. If country B produces 300 tons of steel, how many tons of wheat can it produce?