Exam 1: First Principles

Consider a production possibility frontier for Iraq.If in 2014 Iraq's resources are not being fully utilized, Iraq will be somewhere of its production possibility frontier. A.inside B.outside C.near the bottom near D.the top

(Table: Fish and Coconut Production Possibilities) Look at the table Fish and Coconut Production Possibilities.The table shows the maximum amount of fish or coconuts that Tom and Hank can produce when each produces only one of the goods.The table implies that Tom has a comparative advantage in the production of both goods.

Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. (Figure: Comparative Advantage) Look at the figure Comparative Advantage.Eastland has a comparative advantage in producing: A.oranges only. B.peaches only. C.both oranges and peaches. D.neither oranges nor peaches.

The effect of an increase in productive inputs such as labor and capital can be shown by: A.a point inside of the production possibility frontier. B.an outward shift of the production possibility frontier. C.a movement from one point to another along the production possibility D.frontier.an inward shift of the production possibility frontier.

Explain why economists believe that in reality production possibility frontiers have a bowed-out curvature rather than a straight line.

Figure: Strawberries and Submarines II (Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II.Point F: A.is unattainable, all other things unchanged. B.is attainable if the quantity and/or quality of factors C.decreases.is attainable if the economy is able to reach D.full employment.is feasible but not efficient.