Exam 3: The Economic Problem

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,which of the following statements is correct?

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

Suppose that after specializing according to comparative advantage,a country is trading with another nation that also specializes according to its comparative advantage.Which of the following statements are true for the first country? I.It enjoys gains from trade. Ii.It must have an absolute advantage in the production of the good it produces. Iii.It is producing at a point beyond its PPF.

If a nation has an absolute advantage in producing a good,then it

In one hour John can produce 20 loaves of bread or 16 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

"When a person has an absolute advantage in producing a good,the person necessarily has a lower opportunity cost of producing it." Is this assertion correct or incorrect? Explain your answer.

In terms of a nation's production possibilities frontier,what impact does international trade have?

On a production possibilities frontier diagram,where are production points that have tradeoffs? Where are production points with a free lunch?

The fact of increasing opportunity cost when moving on the PPF means that

-Jean can either type her term paper or create Web pages during the limited time she has available.The table above shows her PPF. a.Can Jean type 90 pages and create 2 Web pages? b.Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

The opportunity cost of producing more of one good on a production possibilities frontier is

Which of the following is the best definition of economic growth?

Draw a production possibilities frontier between beans and peas.Label the unattainable points,the attainable points with fully employed resources,and the attainable points with unemployed resources.

-A (very,very small)country produces milk and shirts and its production possibilities frontier is in the table above. a.The nation is currently producing at point B.What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show? b.Suppose the nation is initially producing 4 gallons of milk and 40 shirts.What is the opportunity cost of 2 additional gallons of milk? Explain your answer.

As an economy increasingly specializes in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

Which of the following is correct about comparative advantage?

How can a nation that is at an absolute disadvantage gain from trade?

On a production possibilities frontier,500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier,300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points,what is the opportunity cost of producing a pound of bananas?