Exam 2: Economic Models

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. Based on this information, _____ has the comparative advantage in making brownies and _____ has the comparative advantage in making cookies.

Which of the following statements is TRUE?

Greta starts using a new baking technique, and she can now do twice as much of everything. In a single day Greta can now make 10 cakes or 8 pies, rather than the 5 cakes and 4 pies she could previously bake. Greta's production possibility frontier has _____, but her opportunity costs of making pies _____.

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves. To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what. Sarah and Zoe should determine which roommate:

All points inside the production possibility frontier represent:

In the factor market, firms buy resources.

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 most firms undergo a significant increase in productivity. This results in a significant increase in the output of both coconuts and fish. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:

Use the following to answer questions: Figure: Consumer and Capital Goods -(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates:

The _____ illustrates the trade-offs facing an economy that produces only two goods.

In building models, economists avoid making any assumptions that might leave out any aspect of reality.

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 inefficient combination of coconuts and fish?

The production possibility frontier is bowed out because:

Trade takes the form of _____ when people directly exchange goods they have for goods they want.

In the factor market, households buy goods and services.

Consider a point within a production possibility frontier for a simple economy that produces only two goods, X and Y. Why is this point described as feasible but not efficient?

Which of the following offices of the U.S. government is a major employer of economists?

Use the following to answer questions : Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. -(Figure: Comparative Advantage) Look at the figure Comparative Advantage. Eastland has an absolute advantage in producing:

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 Sweden is _____ box(es) of herring.

Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports.

All points outside the production possibility frontier are: