Exam 2: Choices and Trade-Offs in the Market

Figure 2-3 Figure 2-3 shows various points on three different production possibility frontiers for a nation. -Refer to Figure 2-3.A movement from X to Y

The opportunity cost of going to an outdoor music festival is

Because the copyright on the L.Frank Baum book The Wonderful Wizard of Oz expired many years ago,the actual written words from the book are in the public domain.Publishers who now choose to sell their own versions of the book

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

Figure 2-2 -Refer to Figure 2-2.Steve Vignetto raises cattle and llamas on his land.His land is equally suitable for raising either animal.Which of the graphs in Figure 2-2 represents his production possibility frontier?

What is meant by the term 'opportunity cost'?

Any output combination along a production possibility frontier is associated with fully utilised resources.

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point D,what is the opportunity cost of moving to point B?

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?

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.Which of the following statements is true?

In economics,the term 'free market' refers to a market where products are traded but not sold.

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

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?

On a diagram of a production possibility frontier,economic growth is represented by the slope of the production possibility frontier.

According to the production possibility model,if more resources are allocated to the production of physical and human capital,then which of the following is likely to happen?

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?

Figure 2-1 -Refer to Figure 2-1.Point B is

Adam Smith's behavioural assumption about humans was that people

Table 2-2 Production choices for Billie's Bedroom Shop -Refer to Table 2-2.Assume Billie's Bedroom Shop only produces pillows and blankets.A combination of 9 pillows and 14 blankets would appear