Question 1

Figure 2-7
  
Mercedes Benz recently decided to introduce its B-class automobile in the U.S.market, an electric car that is has designed and developed in a partnership with Tesla Motors.Assume Mercedes Benz chooses to produce both electric-engine vehicles and gasoline-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,Mercedes cuts back on the production of electric vehicles and increased its production of gasoline-powered vehicles.This strategy is best represented by the

Accepted Answer

A) movement from F to E in Graph A. 
B) movement from G to J in Graph B. 
C) movement from L to K in Graph C. 
D) movement from J to H in Graph B.

Question 2

Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?

Accepted Answer

The answer of Is it possible for a firm to...

Question 3

On a diagram of a production possibility frontier,opportunity cost is represented by the production possibility frontier shifting outward.

Accepted Answer

A) True 
 B)False

Question 4

Table 2-13
 $$\begin{array} { | l | c | c | } 
\hline & \text { Tammi } & \text { Horace } \
\hline \begin{array} { l } 
\text { Dogs } \
\text { Groomed }
\end{array} & 20 & 12 \
\hline \text { Cats Bathed } & 10 & 8 \
\hline
\end{array}$$ 
Table 2-13 shows the output per day of two pet groomers, Tammi and Horace.They can either devote their time to grooming dogs or bathing cats.
-Refer to Table 2-13.Which of the following statements is true?

Accepted Answer

A) Horace has an absolute advantage in both tasks. 
B) Tammi has an absolute advantage in both tasks. 
C) Horace has an absolute advantage in dog grooming and Tammi in cat bathing. 
D) Horace has an absolute advantage in cat bathing and Tammi in dog grooming.

Question 5

Suppose in the United States,the opportunity cost of producing a motor engine is 4 auto bodies.In Canada,the opportunity cost of producing a motor engine is 2 auto bodies.
a.What is the opportunity cost of producing an auto body for the United States?
b.What is the opportunity cost of producing an auto body for Canada?
c.Which country has a comparative advantage in the production of auto bodies?
d.Which country has a comparative advantage in the production of motor engines?

Accepted Answer

The answer of Suppose in the United States,the opportunity cost...

Question 6

Figure 2-4
  
Figure 2-4 shows various points on three different production possibilities frontiers for a nation.
-Refer to Figure 2-4.A movement from ________ is the result of advancements in plastic production technology.

Accepted Answer

A) V to X 
B) W to X 
C) Z to W 
D) Y to Z

Question 7

If a country produces only two goods,it is possible to have an absolute advantage in the production of both those goods.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-4
  
Figure 2-4 shows various points on three different production possibilities frontiers for a nation.
-Refer to Figure 2-4.A movement from Y to Z

Accepted Answer

A) represents an increase in the demand for plastic products. 
B) could occur because of general technological advancements. 
C) is the result of advancements in food production technology. 
D) is the result of advancements in plastic production technology.

Question 9

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

Accepted Answer

A) technically efficient. 
B) unattainable with current resources. 
C)  inefficient in that not all resources are being used. 
D) is the equilibrium output combination.

Question 10

Table 2-1
Production choices for Tomaso's Trattoria
 $$\begin{array} { | c | c | c | } 
\hline \text { Choice } & \begin{array} { l } 
\text { Quantity of } \
\text { Pizzas } \
\text { Produced }
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { Calzones } \
\text { Produced }
\end{array} \
\hline \text { A } & 48 & 0 \
\hline \text { B } & 36 & 15 \
\hline \text { C } & 24 & 30 \
\hline \text { D } & 12 & 45 \
\hline \text { E } & 0 & 60 \
\hline
\end{array}$$
-Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 24 pizzas and 15 calzones would appear

Accepted Answer

A) along Tomaso's production possibilities frontier. 
B) inside Tomaso's production possibilities frontier. 
C) outside Tomaso's production possibilities frontier. 
D) at the horizontal intercept of Tomaso's production possibilities frontier.

Question 11

Table 2-12
 $$\begin{array} { | l | c | c | } 
\hline & \text { One canoe } & \text { One Sailboat } \
\hline \text { Guaternala } & 10 \text { hours } & 60 \text { hours } \
\hline \text { Monduras } & 15 \text { hours } & 75 \text { hours } \
\hline
\end{array}$$ 
Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-12.Honduras has a comparative advantage in the production of

Accepted Answer

A) canoes. 
B) sailboats. 
C) both products. 
D) neither product.

Question 12

Table 2-21
 $$\begin{array} { | l | c | c | } 
\hline & \text { Digital Carner a } & \text { Wheat (bushels) } \
\hline \text { China } & 100 \text { hours } & 5 \text { hours } \
\hline \text { South Korea } & 90 \text { hours } & 3 \text { hours } \
\hline
\end{array}$$
-Refer to Table 2-21.This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.
  
h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "B" for China and "J" for South Korea.
i.Has trade made the two countries better off? Explain your answer.

Accepted Answer

The answer of Table 2-21
 \[\begin{array} { | l |...

Question 13

Table 2-19
 $$\begin{array} { | l | c | c | } 
\hline & \text { Wilrn } & \text { Betty } \
\hline \text { Statues } & 12 & 14 \
\hline \text { Benches } & 4 & 7 \
\hline
\end{array}$$ 
Table 2-19 shows the output per month of two people, Wilma and Betty.They can either devote their time to making marble statues or making marble benches.
-Refer to Table 2-19.Which of the following statements is true?

Accepted Answer

A) Wilma has a comparative advantage in making both products. 
B) Betty has a comparative advantage in making both products. 
C) Betty has a comparative advantage in making statues and Wilma in making benches. 
D) Betty has a comparative advantage in making benches and Fred in making statues.

Question 14

A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier.

Accepted Answer

A) True 
 B)False

Question 15

________ marginal opportunity cost implies that the more resources already devoted to any activity,the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Accepted Answer

A) Increasing 
B) Decreasing 
C) Constant 
D) Negative

Question 16

Figure 2-13
  
Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey.
-Refer to Figure 2-13.What is the opportunity cost of producing one gallon of milk in Bora Bora?

Accepted Answer

A) 2/3 gallon of honey 
B) 0.8 gallon of honey 
C)  1.125 gallons of honey 
D) 1.5 gallons of honey

Question 17

If Blake can pick more cherries in one hour than Cody,then Blake has a comparative advantage in cherry picking.

Accepted Answer

A) True 
 B)False

Question 18

Comparative advantage means

Accepted Answer

A) the ability to produce more of a product with the same amount of resources than any other producer. 
B) the ability to produce a good or service at a lower opportunity cost than any other producer. 
C) the ability to produce a good or service at a higher opportunity cost than any other producer. 
D) compared to others you are better at producing a product.

Question 19

An organization of producers that limits the amount of a good produced is known as a

Accepted Answer

A) free market organization. 
B) guild. 
C) collective. 
D) co-op.

Question 20

Figure 2-14
  
Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-14.Which country has a comparative advantage in the production of pineapples?

Accepted Answer

A) Guatemala 
B) They have equal productive abilities. 
C) Costa Rica 
D) neither country

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

Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?

On a diagram of a production possibility frontier,opportunity cost is represented by the production possibility frontier shifting outward.

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from ________ is the result of advancements in plastic production technology.

If a country produces only two goods,it is possible to have an absolute advantage in the production of both those goods.

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from Y to Z

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

A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier.

________ marginal opportunity cost implies that the more resources already devoted to any activity,the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-13.What is the opportunity cost of producing one gallon of milk in Bora Bora?

If Blake can pick more cherries in one hour than Cody,then Blake has a comparative advantage in cherry picking.

Comparative advantage means

An organization of producers that limits the amount of a good produced is known as a

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-14.Which country has a comparative advantage in the production of pineapples?