Exam 2: Choices and Trade-Offs in the Market

When you purchase a new set of spurs you do so in the

The basis for trade is comparative advantage,not absolute advantage.

Table 2-4 Table 2-4 shows the output per week of two jewelers,Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-4.What is Serena's opportunity cost of making a necklace?

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

Jane can bake either a combination of 25 cakes and 15 pies or a combination of 10 cakes and 20 pies.If she now bakes 10 cakes and 20 pies,what is the opportunity cost of baking an additional 15 cakes?

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

Stricter laws and regulations to protect intellectual property rights

The primary purpose of ________ is to encourage the expenditure of funds on research and development to create new products.

If a country produces only two goods,it is possible to have a comparative advantage in the production of both those goods.

In a two-good,two country world,if one country has an absolute advantage in the production of both goods,it cannot benefit by trading with the other country.

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

Which of the following is a factor of production?

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.What is the opportunity cost of 80 dozen orchids?

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?

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?

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 pound of wheat? f.What is South Korea's opportunity cost of producing one pound 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?

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 pound of cashews in Indonesia?

A bed of oysters is not an example of a factor of production but the shucked oysters used to make oyster stew is a factor of production.

What is comparative advantage? What is absolute advantage?

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 advancements in technology with respect to only plastic production?