Exam 3: The Economic Problem

-Omar and John can fix computers or write computer programs.The table above shows the number of computers they can fix and the lines of code they can write in a day. a.Who,if anyone,has the absolute advantage? b.Who has the comparative advantage in fixing computers? Why? c.Who has the comparative advantage in writing programs? Why?

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods cannot be produced with the current resources and technology?

John can make pizza at a lower opportunity cost than Allen,but Allen can make more pizzas per day than John.Therefore,

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

The opportunity cost of one more slice of pizza in terms of sodas is the

Moving on a bowed out PPF,what happens to the opportunity cost of its production as a nation specializes more in one product?

Once you find the opportunity cost of producing one unit of a good,to find the opportunity cost of producing the other good,you must

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

-Two nations can produce computers and software in the amounts given in the table above.Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

In a production possibilities frontier diagram,the attainable production points are shown as

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

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

The gains from trade include: i.lower prices from competition ii.greater output from specialization iii.greater variety of goods and services available

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.

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

To achieve gains from trade,a country

-The figure above shows a nation's production possibilities frontier.In the figure,point B shows

Why is a production possibilities frontier bowed out (concave)?

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

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