Exam 2: Confronting Scarcity: Choices in Production

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

Use the following to answer question(s): Exhibit: Bicycles and Radishes 1 -(Exhibit: Bicycles and Radishes 1) The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and Country B is now operating at point N. Suppose Country B wants to be able to produce more radishes and more bicycles. To do this, it must:

Use the following to answer question(s): Exhibit: Bicycles and Radishes 1 -(Exhibit: Bicycles and Radishes 1) The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and Country B is now operating at point N. Suppose Country A discovered a new technology that greatly increased its ability to produce bicycles. This would:

Use the following to answer question(s): Exhibit: Production Possibilities Curve 1 -(Exhibit: Production Possibilities Curve 1) If the economy is currently facing production possibilities Curve x, it is more likely to achieve Curve z in the future if it allocates resources to produce at point:

Use the following to answer question(s): Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:

Use the following to answer question(s): Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) The "bowed-out" shape of the production possibilities curve shown here demonstrates:

To be considered capital, a factor of production must:

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is ____ __ pound(s) of potatoes.

An economy is said to have a comparative advantage in producing a particular good if it:

The factors of production are:

If the United States decides to allocate more resources to capital goods and less to consumer goods, the United States will obtain a greater degree of:

An economy that has the lowest cost for producing a particular good is said to have a(n):

Use the following to answer question(s): Exhibit: Strawberries and Submarines -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point G. This implies that:

A source of economic growth is:

Use the following to answer question(s): Exhibit: Production Possibilities Curve for Firms A and B -(Exhibit: Production Possibilities Curve for Firms A and B. In Firm B, the opportunity cost of producing 1 more unit of good Y is:

If an economy is operating on its production possibilities curve, it is:

List the three factors of production and explain what they are and their relative function in the production process.

There are several advantages that a market economy possesses. These do not include the fact that market economies:

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibilities curve is:

Use the following to answer question(s): Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to H on Curve 1 would: