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

a.Draw a production possibilities frontier for a country that produces two goods,beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

If the production possibilities frontier is ________,then opportunity costs are constant as more of one good is produced.

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia.Each country produces two goods,cotton and cashews. -Refer to Figure 2-7.What is the opportunity cost of producing 1 pound of cashews in Pakistan?

In a report made to the U.S.Congress in 2001,the National Academy of Sciences cautioned that if fuel economy encourages the production of smaller and lighter cars,"Some additional traffic fatalities would be expected." This statement suggests that

Figure 2-1 -Refer to Figure 2-1.Point A is

The opportunity cost of taking a semester-long economics class is

An outward shift of a nation's production possibilities frontier represents

If Sanjaya can shuck more oysters in one hour than Tatiana,then Sanjaya has a comparative advantage in shucking oysters.

Figure 2-10 -Refer to Figure 2-10.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?

Table 2-5 -Refer to Table 2-5.This table shows the number of labor hours required to produce a digital cameras and a bushel of wheat in China and South Korea. a.Which country has an absolute advantage in the production of digital cameras? b.Which country has an absolute advantage in the production of wheat? c.What is China's opportunity cost of producing one digital camera? d.What is South Korea's opportunity cost of producing one digital camera? e.What is China's opportunity cost of producing one pound of wheat? f.What is South Korea's opportunity cost of producing one pound of what? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce digital cameras? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce wheat?

Without an increase in the supplies of factors of production,how can a nation achieve economic growth?

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point Y,what is the opportunity cost of moving to point W?

The payment received by suppliers of entrepreneurial skills is called interest.

Table 2-1 Production choices for Tomaso's Trattoria -Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 36 pizzas and 30 calzones would appear

Table 2-4 Table 2-4 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 2-4.Does either China or South Korea have an absolute advantage and if so,in what product?

Table 2-4 Table 2-4 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 2-4.What is South Korea's opportunity cost of producing one digital camera?

According to the production possibility model,if more resources are allocated to the production of physical and human capital,then which of the following is likely to happen?

Figure 2-1 -Refer to Figure 2-1.Point B is

Figure 2-4 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 ?

Table 2-1 Production choices for Tomaso's Trattoria -Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 24 pizzas and 15 calzones would appear