Question 1

Table 2-5
 
-Refer to Table 2-5.This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.

Accepted Answer

The answer of Table 2-5
 
-Refer to Table 2-5.This table...

Question 2

Which of the following would shift a nation's production possibilities frontier outward?

Accepted Answer

A)  discovering a cheap way to convert sunshine into electricity 
B)  an increase in demand for the nation's products 
C)  a decrease in the unemployment rate 
D)  a law requiring workers to retire at age 50

Question 3

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.

Accepted Answer

The answer of a.Draw a production possibilities frontier for a...

Question 4

The resource income earned by those who supply ________ is called wages.

Accepted Answer

A)  labor 
B)  capital 
C)  natural resources 
D)  entrepreneurship

Question 5

An inward shift of a nation's production possibilities frontier can occur due to

Accepted Answer

A)  a reduction in unemployment. 
B)  a natural disaster like a hurricane or bad earthquake. 
C)  a change in the amounts of one good desired. 
D)  an increase in the labor force.

Question 6

Each person goes about her daily business seeking to maximize her own self interests.In doing so,she contributes to the welfare of society at large.This is the idea underlying Adam Smith's "invisible hand."

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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.If the two countries specialize and trade,who should export digital cameras?

Accepted Answer

A)  There is no basis for trade between the two countries. 
B)  China 
C)  South Korea 
D)  They should both be importing digital cameras.

Question 9

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 10

Which of the following is not a factor of production?

Accepted Answer

A)  an acre of farmland 
B)  a drill press in a machine shop 
C)  the manager of the local tire shop 
D)  $1,000 in cash

Question 11

Table 2-3

Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2-3.What is Serena's opportunity cost of making a bracelet?

Accepted Answer

A)  2 necklaces 
B)  1/2 of a bracelet 
C)  1/2 of a necklace 
D)  3/4 of a bracelet

Question 12

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 bolt of cotton in Pakistan?

Accepted Answer

A)  3/8 of a pound of cashews 
B)  5/8 of a pound of cashews 
C)  1 3/5 pounds of cashews 
D)  150 pounds of cashews

Question 13

An example of a factor of production is

Accepted Answer

A)  stock issued by Dell. 
B)  the computers exported by Dell. 
C)  a computer produced by an Dell. 
D)  a worker hired by Dell.

Question 14

Figure 2-6

General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Assume GM chooses to produce both hybrid-engine vehicles and gasoline-engine vehicles for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions.
-Refer to Figure 2-6.Assume that in 2011,GM was able to reopen one of its factories after an extensive remodelling which now allows for the production of both types of vehicles.This is best represented by the

Accepted Answer

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

Question 15

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?

Accepted Answer

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

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 2-3

Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2-3.Which of the following statements is true?

Accepted Answer

A)  Haley has a comparative advantage in making both products. 
B)  Serena has a comparative advantage in making both products. 
C)  Haley has a comparative advantage in making bracelets and Serena in making necklaces. 
D)  Haley has a comparative advantage in making necklaces and Serena in making bracelets.

Question 18

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

Accepted Answer

A)  John Maynard Keynes. 
B)  Karl Marx. 
C)  Alfred Marshall. 
D)  Adam Smith.

Question 19

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 20

Figure 2-6

General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Assume GM chooses to produce both hybrid-engine vehicles and gasoline-engine vehicles for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions.
-Refer to Figure 2-6.In response to changing consumer demands,GM has cut back on the production of hybrids 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.

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

Table 2-5 -Refer to Table 2-5.This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.

Which of the following would shift a nation's production possibilities frontier outward?

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.

The resource income earned by those who supply ________ is called wages.

An inward shift of a nation's production possibilities frontier can occur due to

Each person goes about her daily business seeking to maximize her own self interests.In doing so,she contributes to the welfare of society at large.This is the idea underlying Adam Smith's "invisible hand."

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

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.If the two countries specialize and trade,who should export digital cameras?

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

Which of the following is not a factor of production?

Table 2-3 Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-3.What is Serena's opportunity cost of making a bracelet?

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 bolt of cotton in Pakistan?

An example of a factor of production is

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?

________ 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.

Table 2-3 Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-3.Which of the following statements is true?

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

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