Exam 2: Model Building and Gains From Trade

Consider the following scenario to answer the following questions: On a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with spaces where you can calculate the opportunity cost. -At what terms of trade (relative price ratio)could they specialize and trade with one another so that both have more trees planted and mulch spread than they could accomplish on their own?

Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions. -What is Mikhail's opportunity cost of a painting?

Economic growth is,by definition,an increase in the

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the following questions. -Which statement best describes absolute advantage?

Refer to the following figure to answer the following questions. -We can see that the opportunity cost of moving from point D to point E is different from the opportunity cost of moving from point D to point C because

For both parties to benefit from specialization and trade,the trading parties must agree on

Consider the following scenario to answer the following questions: Kukla makes tables, with an opportunity cost of 3 rugs per every 4 tables. Zola makes rugs, with an opportunity cost of 2 tables per every 3 rugs. -Ollie proposes that Kukla give Zola 1 table in exchange for 2 rugs.What are Kukla's and Zola's reactions?

One reason that economists make assumptions when designing models is to

When one producer has a comparative advantage in production,he or she

Goods that are produced for current consumption are called ________ goods.

Suppose someone finds a production possibilities frontier (PPF)that is shaped like a straight line.What can one determine about the production of the two goods?

Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?

Variables that are controlled for in a model are called

Explain how scarcity is the root cause of the trade-offs and opportunity cost illustrated in the production possibilities frontier (PPF).

The existing entries in the following table show the maximum quantities of milk shakes or fruit smoothies the college president and dining hall staffer could make during an afternoon shift,given a fixed amount of resources. a.Fill in the remaining part of the table (be sure to label the units)and answer the questions below. b.Who has a comparative advantage in producing smoothies? c.Who has an absolute advantage in producing milk shakes?

One has an absolute advantage in producing something whenever

Car companies build wind tunnels to test the aerodynamics and the handling capabilities of their car designs.The many variables that can be precisely controlled inside the wind tunnel are considered ________ factors.

Suppose Hoda is a brilliant attorney who can draft especially persuasive legal briefs.She also happens to possess some excellent administrative skills such as typing,filing,assembling binders and notes,and making reservations.Which best describes whether Hoda should hire an administrative assistant to help her?

Which of the following is necessary to build a good economic model?

Refer to the following figure to answer the following questions. -Which point in the corresponding figure represents a combination of smoothies and milk shakes that society CANNOT currently produce?