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

List the four broad categories of factors of production.

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.Japan has a comparative advantage in the production of

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 patent protection period to 75 years B.a hurricane that destroys a substantial portion of a nation's capital stock C.the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z?

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 that in response to changing consumer demands,Apple cuts back on the production of self-driving automobiles and increases its production of traditional automobiles.This strategy is best represented by the

Suppose that in Belize,the opportunity cost of producing a sailboat is 5 hang gliders.In Honduras,the opportunity cost of producing a sailboat is 8 hang gliders. a.What is the opportunity cost of producing a hang glider for Belize? b.What is the opportunity cost of producing a hang glider for Honduras? c.Which country has a comparative advantage in the production of hang gliders? d.Which country has a comparative advantage in the production of sailboats?

Figure 2-17 -Refer to Figure 2-17.One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F.Who are economic agents E and what is market F?

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 that in 2022,Apple temporarily shuts down one of its factories for an extensive renovation,and this reduces the amount of production capacity available for both types of vehicles.This is best represented by the

What is a circular flow diagram and what does it demonstrate?

Cell Phone Lumber (buard feet) Estonia 20 hours 5 hours Finland 18 hours 4 hours -Refer to Table 2-31.This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. a.Which country has an absolute advantage in the production of cell phones? b.Which country has an absolute advantage in the production of lumber? c.What is Estonia's opportunity cost of producing one cell phone? d.What is Finland's opportunity cost of producing one cell phone? e.What is Estonia's opportunity cost of producing one board foot of lumber? f.What is Finland's opportunity cost of producing one board foot of lumber? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce cell phones? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce lumber?

Adam Smith's invisible hand refers to

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.a decrease in a nation's money supply C.a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y to W?

One Motorcycle One Guitar Ireland 20 hours 4 hours Scotland 8 hours 2 hours Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14.Ireland has a comparative advantage in the production of

Minnie Mickey Hats 40 50 Urrbrellas 10 5 Table 2-18 shows the output per week of two people,Minnie and Mickey.They can either devote their time to making hats or making umbrellas. -Refer to Table 2-18.What is Mickey's opportunity cost of making an umbrella?

The production possibilities frontier model assumes which of the following?

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.Which of the following statements is true?

Which of the following would shift a nation's production possibilities frontier outward?

Figure 2-8 above shows the production possibilities frontier for Vidalia,a nation that produces two goods,roses and orchids. -Refer to Figure 2-8.If Vidalia chooses to produce 60 dozen orchids,how many roses can it produce to maximize production?

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 Costa Rica?

One Cell Phone Lumber (per board foot) Estonia 40 hours 8 hours Finland 16 hours 4 hours Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16.If the two countries specialize and trade,who should export lumber?

In a two-good,two country world,if one country has an absolute advantage in the production of both goods,it can still benefit by trading with the other country.