Exam 2: Model Building and Gains From Trade

Consider the following scenario to answer the following questions: Kukla makes tables,with an opportunity cost of 3 rugs per every 4 tables.Zola makes rugs,with an opportunity cost of 2 tables per every 3 rugs. -Ollie proposes that Kukla give Zola 2 tables in exchange for 2 rugs.What are Kukla's and Zola's reactions?

An economist's use of experiments and real-world data to test a theory is an example of

use the figure below to answer the following questions : the accompanying figure -Given the current resources,one would need even more hours in each day in order to attain

use the figure above to answer the following questions : -Which point in the corresponding figure represents a combination of smoothies and milk shakes that society CANNOT currently produce?

The production possibilities frontier (PPF)shows

The process of using current resources to create new capital is

Draw a production possibilities frontier (PPF)that shows a pizza shop's production trade-offs between producing pizzas and stromboli.Suppose the pizza shop upgrades to a larger,more automated oven.On the same graph,show how the PPF changes.(The oven is used to bake both pizzas and stromboli. )

Based on the figure,which statement about comparative advantage is true?

The ________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

Suppose that,during an afternoon at Hambre's favorite ski resort,Hambre could either make additional runs down the slopes or produce and sip hot chocolate by the fire in the lodge.Draw a production possibilities frontier (PPF)that describes his production trade-offs between runs skied (by riding the chairlift to the top and skiing down the slope)versus cups of hot chocolate produced and sipped.Hambre's production of each of these goods is subject to constant marginal opportunity costs in production,so be sure that,in the graph,the opportunity cost of one activity in terms of the other is the same at any point on the PPF. Now suppose that a new superfast ski lift reduces the time it takes to get to the top of the mountain.Show,on the same graph,how this changes the PPF.

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

Kristen is planning to add new mulch to all the landscaping beds around her house.She has determined the quantity of mulch she will need and identified these two options for getting the mulch to her house: 1.Kristen can have all the mulch delivered to her yard in one dump truck for $450. 2.Kristen can make four trips to the garden center with her pickup truck and haul it herself.It will cost her $75 per load for the mulch,plus $25 in fuel and truck wear per load.She estimates it will take about five hours to haul and unload all four loads. What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?

The area inside (within)the production possibilities frontier (PPF)contains ________ points.

At what terms of trade (relative price ratio)could they specialize and trade with one another so that both have more trees planted and mulch spread than they could accomplish on their own?

As we move from one efficient point on the production possibilities frontier (PPF)to another efficient point on the PPF,we experience

Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Consider the production possibilities frontier (PPF)shown in the figure below to answer the following questions. use the figure above to answer the following questions : -Given current resources and technology,the attainable range is best described as

For both parties to benefit from specialization and trade,the trading parties must agree on

Explain how scarcity is the root cause of the trade-offs and opportunity cost illustrated in the production possibilities frontier (PPF).

use the figure below to answer the following questions : -The opportunity cost of increasing production of blueberry pies from 7 to 11 pies is ________ pies.