Exam 2: Model Building and Gains From Trade

Goods that are produced for current consumption are called_______ goods.

The production possibilities frontier PPF) shows

The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called

The important act of holding all other variables constant while examining a particular variable is known as

Specialization and trade allow individuals to

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.

An increase in the labor force would be reflected in a society's production possibilities frontier PPF) by an

In the movie A Knight's Tale, three peasants win a jousting tournament and must decide whether they should enjoy most of their winnings now or use most of it for training to improve their future jousting performances. Use appropriate production possibilities frontiers PPFs) and words to describe the investment trade-off they face.

Refer to the following figure to answer the next 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

Nadine is considering the "dress well, test well" theory, which argues that one performs better on exams when one dresses nicer than one does when wearing sweatpants. If Nadine wants to test this theory over the course of the semester, which of the following would be an endogenous factor in her experiment?

Forgoing current consumption so that those resources can be used to produce new capital is called

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 next questions. -What is Gibbs's opportunity cost of solving a crime?

Consider the following scenario to answer the next questions: Two friends, Monica and Chandler, enjoy baking bread and making apple pies. Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Chandler takes four hours to bake 1 loaf of bread and four hours to make 1 pie. -If Monica and Chandler decide to specialize in order to maximize their combined output, who should produce what?

If Lola can produce more output from a set amount of resources than Kevin, _______has a(n) _______advantage.

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 next questions. -Which statement best describes absolute advantage?

Refer to the accompanying figure to answer the next questions. -Unemployed resources are evident at

Use these production possibilities frontier PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the next questions. A. B. C. D. E. -Suppose a great plague wipes out half of the society's population. Which of the following graphs best depicts how this would affect the PPF?

The figures below depict the production possibilities frontiers PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the next questions. -What is Bo's opportunity cost of making 1 pizza?

Suppose that, during an afternoon at Hambre's favorite ski resort, Hambre could either make additional runs down the slopes or produce and sip hot chocolate by the fire in the lodge. Draw a production possibilities frontier PPF) that describes his production trade-offs between runs skied by riding the chairlift to the top and skiing down the slope) versus cups of hot chocolate produced and sipped. Hambre's production of each of these goods is subject to constant marginal opportunity costs in production, so be sure that, in the graph, the opportunity cost of one activity in terms of the other is the same at any point on the PPF. Now suppose that a new superfast ski lift reduces the time it takes to get to the top of the mountain. Show, on the same graph, how this changes the PPF.

Refer to the following figure for the next questions. -The opportunity cost of increasing production of blueberry pies from 7 to 11 pies is_______ pies.