Question 1

Table 2-17
 $\begin{array}{|l|c|c|}
\hline & \text { James } & \text { Lucy } \
\hline \text { Wagons } & 16 & 18 \
\hline \text { Tricycles } & 32 & 24 \
\hline
\end{array}$ Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles.
-Refer to Table 2-17.What is Lucy's opportunity cost of making a tricycle?

Accepted Answer

A)  3/4 of a wagon 
B)  3 wagons 
C)  1 1/3 tricycles 
D)  2 tricycles

Question 2

Figure 2-6
 
-Refer to Figure 2-6.If the economy is currently producing at point A,what is the opportunity cost of moving to point B?

Accepted Answer

A)  8 thousand wrenches 
B)  6 thousand hammers 
C)  30 thousand wrenches 
D)  23 thousand hammers

Question 3

Table 2-19
 $\begin{array}{|l|c|c|}
\hline & \text { Wilma } & \text { Betty } \
\hline \text { Statues } & 12 & 14 \
\hline \text { Benches } & 4 & 7 \
\hline
\end{array}$ 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.What is Wilma's opportunity cost of making a bench?

Accepted Answer

A)  1/3 of a statue 
B)  3 statues 
C)  1/2 of a bench 
D)  1.3 statues

Question 4

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 5

Table 2-11
 $\begin{array}{|l|c|c|} 
\hline & \begin{array}{c}
\text { One Digital } \
\text { Camera }
\end{array} & \begin{array}{c}
\text { Wheat } \
\text { (per pound) }
\end{array} \
\hline \text { China } & 100 \text { hours } & 4 \text { hours } \
\hline \text { South Korea } & 60 \text { hours } & 3 \text { hours }\
\hline 
\end{array}$ 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.China has a comparative advantage in the production of

Accepted Answer

A)  wheat. 
B)  digital cameras. 
C)  both products. 
D)  neither product.

Question 6

Table 2-21
 $\begin{array}{|l|c|c|}
\hline & \text { Digital Camera } & \text { Wheat (bushel) } \
\hline \text { China } & 100 \text { hours } & 5 \text { hours } \
\hline \text { South Korea } & 90 \text { hours } & 3 \text { hours } \
\hline
\end{array}$
-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.
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 bushel of wheat?
f.What is South Korea's opportunity cost of producing one pound of wheat?
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?

Accepted Answer

The answer of Table 2-21
 \(\begin{array}{|l|c|c|}
\hline & \text { Digital...

Question 7

Figure 2-7
  Tesla opened its Gigafactory near Sparks, Nevada to produce lithium-ion batteries for both its automobiles and its Powerwall energy storage products. Figure 2-7 shows changes to its production possibilities frontier at the Gigafactory in response to new developments and different strategic production decisions.
-Refer to Figure 2-7.Suppose worker productivity increases so that the total number of batteries produced increases as Tesla adds more machinery and workers,and changes the layout of the factory.This is best represented by the

Accepted Answer

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

Question 8

Figure 2-18
 
-Refer to Figure 2-18.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar," a professional portrait artist,to paint his picture.

Accepted Answer

A)  J and M 
B)  K and G 
C)  K and M 
D)  J and G

Question 9

Table 2-20
 $\begin{array}{|l|c|c|}
\hline & \text { One Wristwatch } & \text { Rice (per pound) } \
\hline \text { Tapan } & 50 \text { hours } & 2 \text { hours } \
\hline \text { Thailand } & 30 \text { hours } & 1.5 \text { hours } \
\hline
\end{array}$ Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand.
-Refer to Table 2-20.What is Thailand's opportunity cost of producing one wristwatch?

Accepted Answer

A)  0.05 pounds of rice 
B)  20 pounds of rice 
C)  25 pounds of rice 
D)  60 pounds of rice

Question 10

Figure 2-6
 
-Refer to Figure 2-6.If the economy is currently producing at point E,what is the gain in production if the economy moves to point D?

Accepted Answer

A)  13 thousand hammers 
B)  10 thousand hammers 
C)  8 thousand wrenches 
D)  0 wrenches

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Table 2-20
 $\begin{array}{|l|c|c|}
\hline & \text { One Wristwatch } & \text { Rice (per pound) } \
\hline \text { Tapan } & 50 \text { hours } & 2 \text { hours } \
\hline \text { Thailand } & 30 \text { hours } & 1.5 \text { hours } \
\hline
\end{array}$ Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand.
-Refer to Table 2-20.What is Japan's opportunity cost of producing one wristwatch?

Accepted Answer

A)  0.04 pounds of rice 
B)  4 pounds of rice 
C)  25 pounds of rice 
D)  40 pounds of rice

Question 13

For a person to have a comparative advantage in producing a product,she must be able to produce that product at a lower opportunity cost than her competitors.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-13
  Figure 2-13 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-13.If the two countries have the same amount of resources and the same technological knowledge,which country has an absolute advantage in the production of both pineapples and coconuts?

Accepted Answer

A)  Guatemala 
B)  neither country 
C)  Costa Rica 
D)  cannot be determined

Question 15

What causes a production possibilities frontier to shift outward?

Accepted Answer

The answer of What causes a production possibilities frontier to...

Question 16

________ 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 17

Table 2-14
 $\begin{array}{|l|c|c|}
\hline & \text { One Motorcycle } & \text { One Guitar } \
\hline \text { Treland } & 20 \text { hours } & 4 \text { hours } \
\hline \text { Scotland } & 8 \text { hours } & 2 \text { hours }\
\hline 
\end{array}$ Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-14.If the two countries specialize and trade,who should export guitars?

Accepted Answer

A)  There is no basis for trade between the two countries. 
B)  Ireland 
C)  Scotland 
D)  They should both be exporting guitars.

Question 18

Figure 2-6
 
-Refer to Figure 2-6.If the economy is currently producing at point E,what is the opportunity cost of moving to point B?

Accepted Answer

A)  13 thousand hammers 
B)  10 thousand hammers 
C)  30 thousand wrenches 
D)  0 wrenches

Question 19

Economic decline (negative growth)is represented on a production possibilities frontier model by the production possibility frontier

Accepted Answer

A)  shifting outward. 
B)  shifting inward. 
C)  becoming steeper. 
D)  becoming flatter.

Question 20

Households ________ final goods and services in the ________ market.

Accepted Answer

A)  purchase; factor 
B)  purchase; product 
C)  sell; factor 
D)  sell; product

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

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point A,what is the opportunity cost of moving to point B?

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

Figure 2-18 -Refer to Figure 2-18.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar," a professional portrait artist,to paint his picture.

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point E,what is the gain in production if the economy moves to point D?

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

For a person to have a comparative advantage in producing a product,she must be able to produce that product at a lower opportunity cost than her competitors.

What causes a production possibilities frontier to shift outward?

________ 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 2-6 -Refer to Figure 2-6.If the economy is currently producing at point E,what is the opportunity cost of moving to point B?

Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier

Households final goods and services in the market.