Exam 2: Economic Models

Trade can be beneficial to an economy because:

To achieve the gains from trade, each nation should specialize in the production of a good or service if:

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. We know that _____ has a comparative advantage in _____.

If Jim buys a lunch at a restaurant, he has bought a factor of production in the factor market.

Use the following to answer questions : Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Suppose the economy is operating at point B. Achieving production at point F would require that the economy:

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing on the production possibility frontier, what would allow it to produce at point C?

Use the following to answer question : Figure: Bicycles and Radishes II -(Figure: Bicycles and Radishes II) Look at the figure Bicycles and Radishes II. The country depicted in this figure is operating at point M. It could achieve production at point I only if it:

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. The opportunity cost of producing 1 box of oranges for Westland is _____ box(es) of peaches.

Use the following to answer questions : -(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces 10 units of capital goods per period, it also can produce at most _____ units of consumer goods per period.

If the United States is more productive than Mexico in all lines of production, then the United States cannot benefit from trade with Mexico.

Economists usually assume that production is subject to increasing opportunity costs because:

In one day, Kessy can bake 10 cookies or mix 15 glasses of lemonade. His friend Ava can make 10 cookies or 10 glasses of lemonade. His other friend, Ian, can make 10 cookies or 20 glasses of lemonade. Who has the lowest opportunity cost in cookie production?

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____.

Which of the following is a normative statement?

Which of the following is sold in the factor market?

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. Westland has an absolute advantage in producing:

The concept of comparative advantage is based upon:

Use the following to answer questions : -(Table: Crab and Cake Production in Chesapeake) Look at the table Crab and Cake Production in Chesapeake. The table shows the maximum annual output combinations of crabs and cakes. Given the scarce resources and limited technology, as Chesapeake uses more resources for the production of cakes, fewer resources are available to produce crabs. Can this nation produce 200 crabs and 500 cakes? Is this efficient? Explain.

On any given production possibility frontier, we see the minimum quantity of one good that can be produced for any given production of the other.

A simplified representation that is used to study a real situation is called a(n):