Exam 2: Choices and Trade-Offs in the Market

Which of the following is an example of a factor of production?

Suppose there is no unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.

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

What assumption is made by the production possibility frontier model?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.What is Fred's opportunity cost of making a unicycle?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.What is Fred's opportunity cost of making a pogo stick?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.Which of the following statements is true?

When you purchase a new set of spurs you do so in the________.

If the production possibility frontier is ________, then opportunity costs are constant as more of one good is produced.

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 kilograms of cheese.France can produce 1 bottle of wine for every 25 kilograms of cheese it produces.Which of the following is true about the comparative advantage between the two countries?

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

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 cotton?

Scarcity________.

Adam Smith's behavioural assumption about humans was that people________.

Figure 2.3 Figure 2.3 shows various points on three different production possibility frontiers for a nation. -Refer to Figure 2.3.Consider the following movements: a.from point V to point W b.from point W to point Y c.from point Y to point Z Which of the movements listed above represents economic growth?

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 120 dozen roses per period.How many orchids is it also producing, assuming that resources are fully utilised?

What are the attainable production points on a production possibility curve?

Any output combination outside a production possibility frontier is associated with unused or underutilised resources.

Table 2.10 -Refer to Table 2.10.This table shows the number of labour hours required to produce a digital cameras and a bushel of wheat in China and South Korea. a. Which country has an absolute advantage in the production of digital cameras? b. Which country has an absolute advantage in the production of wheat? c. What is China's opportunity cost of producing one digital camera? d. What is South Korea's opportunity cost of producing one digital camera? e. What is China's opportunity cost of producing one kilogram of wheat? f. What is South Korea's opportunity cost of producing one kilogram of what? g. If each country specialises in the production of the product in which it has a comparative advantage, who should produce digital cameras? h. If each country specialises in the production of the product in which it has a comparative advantage, who should produce wheat? __________________________________________________________________________________________________________________________________________________________________________________________