Exam 2: Choices and Trade Offs in the Market

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

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. What is Ireland's opportunity cost of producing one guitar?

Scarcity:

Adam Smith's behavioural assumption about humans was that people:

The Great Depression of the 1930s (during which a large number of workers and factories were unemployed)would be represented in a production possibility frontier graph by:

Rayburn Reed is a highly talented photographer. He has chosen to specialise in photography because of all of the following except:

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 ________ is the result of negative technological change in plastic production.

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. What is Tammi's opportunity cost of grooming a dog?

Figure 2.5 -Refer to Figure 2.5. If the economy is currently producing at point E, what is the opportunity cost of moving to point B?

The production possibility frontier model shows that:

A successful market economy requires:

Which statement is true about the slope of a 'production possibility frontier'?

Figure 2.1 -Refer to Figure 2.1. Point C is:

Figure 2.1 -Refer to Figure 2.1. Point A is:

An increase in the labour force shifts the production possibility frontier inwards over time.

If a country is producing efficiently and is on the production possibility frontier, the only way to produce more of one good is to produce less of the other.

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. If the two countries specialise and trade, who should export guitars?

Figure 2.5 -Refer to Figure 2.5. If the economy is currently producing at point E, what is the opportunity cost of moving to point D?

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. What is the opportunity cost of producing 1 bolt of cotton in Pakistan?

In a free market, there are virtually no restrictions or, at best, few restrictions on how factors of production can be employed.