Exam 2: Choices and Trade - Offs in the Market

The principle of opportunity cost is that

Adam Smith's invisible hand refers to

In a production possibility frontier model, a point ________ the frontier is productively inefficient.

What shape does a production possibility frontier take if it displays increasing opportunity costs? What shape does a production possibility frontier take if it displays constant opportunity costs? Which shape is most common in production situations?

-Refer to Figure 2-1. Point C is

Peter can produce either a combination of 20 bow ties and 30 neckties or a combination of 35 bow ties and 15 neckties. If he now produces 35 bow ties and 15 neckties, what is the opportunity cost of producing an additional 15 neckties?

All of the following are critical functions of the government in facilitating the operation of a market economy except

-Refer to Table 2-4. What is Serena's opportunity cost of making a necklace?

-Refer to Table 2-4. Which of the following statements is true?

When you purchase a new pair of jeans you do so in the

-Refer to Table 2-2. Assume Billie's Bedroom Shop only produces pillows and blankets. A combination of 9 pillows and 21 blankets would appear

The payment received by suppliers of entrepreneurial skills is called interest.

-Refer to Table 2-6. Does either China or South Korea have an absolute advantage and if so, in what product?

If a country produces only two goods, then it is not possible to have an absolute advantage in the production of both those goods.

The slope of a production possibility frontier

-Refer to Figure 2-2. Steve Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2-2 represents his production possibility frontier?

Which of the following is a factor of production?

How does Adam Smith's idea of the 'invisible hand' apply to the various parts, made by many different manufacturers in many different countries, that are used by Apple to produce an iPad?

What is a production possibility frontier? What do points along the frontier represent? What do points inside and outside the frontier represent?

-Refer to Table 2-6. China has a comparative advantage in the production of