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

Table 2-7 Possible Output Combinations Shrimp (thousands of pounds) Oysters (thousands of pounds) A 35 0 B 30 20 C 25 35 D 20 47 E 15 57 F 10 64 G 5 68 H 0 70 -Refer to Table 2-7.The Shellfish Shack produces only shrimp and oysters.The table above shows the maximum possible output combinations of the two types of shellfish using all resources and currently available technology. a.Suppose The Shellfish Shack is currently producing at point E.What is the opportunity cost of producing an additional 11,000 pounds of oysters? b.Suppose The Shellfish Shack is currently producing at point E.What happens to the opportunity cost of producing more and more shrimp? Does it increase,decrease,or remain constant? Explain your answer. c.Suppose The Shellfish Shack is currently producing at point B.What happens to the opportunity cost of producing more and more oysters? Does it increase,decrease,or remain constant? Explain your answer. d.Suppose The Shellfish Shack is plagued by a disease which destroys oyster beds but not shrimp habitats.What would happen to its PPF?

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.What is the opportunity cost of 80 dozen orchids?

Figure 2-2 above shows the production possibilities frontier for Mendonca,an agrarian nation that produces two goods,meat and vegetables. -Refer to Figure 2-2.What is the opportunity cost of one pound of vegetables?

One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11.What is South Korea's opportunity cost of producing one digital camera?

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a different point on the frontier.

To increase gas mileage,automobile manufacturers make cars small and light.Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage.These facts suggest that a negative relationship exists between safety and gas mileage.

What shape does a production possibilities frontier take if it displays increasing opportunity costs? What shape does a production possibilities frontier take if it displays constant opportunity costs? Which shape is most common in production situations?

Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system.

The opportunity cost of taking an on-line history class is

Serena Haley Bracelets 8 9 Necklaces 16 12 Table 2-9 shows the output per week of two jewelers,Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-9.What is Haley's opportunity cost of making a bracelet?

Serena Haley Bracelets 8 9 Necklaces 16 12 Table 2-9 shows the output per week of two jewelers,Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-9.What is Serena's opportunity cost of making a necklace?

One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11.If the two countries specialize and trade,who should export wheat?