Exam 2: Trade-Offs, comparative Advantage, and the Market System

Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-10 shows the output per month of two people,Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-10.What is Barney's opportunity cost of making a unicycle?

The attainable production points on a production possibilities curve are

Figure 2-13 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods,pineapples and coconuts. -Refer to Figure 2-13.What is the opportunity cost of producing 1 ton of coconuts in Guatemala?

Suppose that in Germany,the opportunity cost of producing a gallon of beer is 5 gallons of wine.In Italy,the opportunity cost of producing a gallon of beer is 3 gallons of wine. a.What is the opportunity cost of producing a gallon of wine for Germany? b.What is the opportunity cost of producing a gallon of wine for Italy? c.Which country has a comparative advantage in the production of beer? d.Which country has a comparative advantage in the production of wine?

Figure 2-12 shows the production possibilities frontiers for Tahiti and Bora Bora.Each country produces two goods,milk and honey. -Refer to Figure 2-12.Which country has a comparative advantage in the production of honey?

If a country is producing efficiently and is on the production possibilities frontier,the only way to produce more of one good is with an advance in technology.

What causes a production possibilities frontier to shift inward?

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: a.a decrease in the unemployment rate B.general technological advancement C.an increase in consumer wealth Which of the events listed above could cause a movement from V to W?

James Lucy Wagons 16 18 Tricycles 32 24 Table 2-17 shows the output per week of two people,James and Lucy.They can either devote their time to making wagons or making tricycles. -Refer to Table 2-17.Which of the following statements is true?

If additional units of a good could be produced at a constant opportunity cost,the production possibilities frontier would be bowed outward (concave).

Suppose there is some unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

If the opportunity cost of producing more of one good remains the same as more of that good is produced,then the production method is inefficient.

Firms

Apple recently announced that the company is exploring the electric vehicle market,and is looking to produce vehicles as early as 2020.Assume Apple chooses to produce both traditional electric-engine vehicles and self-driving electric-engine vehicles.Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-7.Assume a technological advancement greatly reduces the cost to produce self-driving vehicles.This is best represented by the

The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

One Wristwatch Rice (per pound) Japan 50 hours 2 hours Thailand 30 hours 1.5 hours Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20.If the two countries specialize and trade,who should export wristwatches?

Table 2-4 Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 80 0 B 60 25 C 40 50 D 20 75 E 0 100 -Refer to Table 2-4.Dina faces ________ opportunity costs in the production of sliders and hot wings.

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: a.an increase in the unemployment rate B.general technological advancement C.an increase in consumer wealth Which of the events listed above could cause a movement from Z to V?

Adam Smith's behavioral assumption about humans was that people

What is the difference between product markets and factor markets?