Exam 2: Choices and Trade Offs in the Market

Table 2.7 Table 2.7 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2.7. Which of the following statements is true?

Table 2.8 Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2.8. Scotland has a comparative advantage in the production of:

Figure 2.3 Figure 2.3 shows various points on three different production possibility frontiers for a nation. -Refer to Figure 2.3. A movement from X to Y:

Figure 2.6 Figure 2.6 above shows the production possibility frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2.6. Suppose Vidalia is currently producing 60 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilised?

If opportunity costs are constant, how would the production possibility frontier be graphed?

Entrepreneurs bring together the factors of production to produce goods and services.

If a commercial dairy farm wants to raise funds to purchase feeding troughs, it does so in the:

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

Table 2.6 Table 2.6 shows the number of labour hours required to produce a digital camera and a kilo of wheat in China and South Korea. -Refer to Table 2.6. Does either China or South Korea have an absolute advantage and if so, in what product?

What is the difference between 'product markets' and 'factor markets'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

If additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be bowed outward (concave).

Any output combination outside a production possibility frontier is associated with unused or under-utilised resources.

Table 2.6 Table 2.6 shows the number of labour hours required to produce a digital camera and a kilo of wheat in China and South Korea. -Refer to Table 2.6. What is South Korea's opportunity cost of producing one digital camera?

Crude oil is not an example of a factor of production, but when crude oil is processed into petrol, it is a factor of production.

In a free market there are significant restrictions on how a good or service can be produced or sold.

The attainable production points on a production possibility curve are:

A 'production possibility frontier' with a bowed outward shape indicates:

What is meant by the term 'free market'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Figure 2.7 Figure 2.7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2.7. Which country has a comparative advantage in the production of cashews?

What is 'economic growth'? _____________________________________________________________________________________________ _____________________________________________________________________________________________