Exam 2: Economic Models

The value of a mortgage-backed security is something that was tied to the overall market for American homes.

Use the following to answer questions : $\text {Table: Fish and Coconut}$ $\text { Production Possibilities}$ Fish Coconuts Tom 12 8 Hank 5 5 -(Table: Fish and Coconut Production Possibilities)Use Table: Fish and Coconut Production Possibilities.The table shows the maximum number of fish or coconuts that Tom and Hank can produce when each produces only one of the goods.The table implies that Hank has an absolute advantage in the production of both goods.

The fact that a society's production possibility frontier is bowed out,or concave to the origin of a graph,demonstrates the law of _____ opportunity cost.

If the production possibility frontier is a straight line:

An economy is said to have a comparative advantage if it:

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

The production possibility frontier illustrates:

The effect of an increase in productive inputs such as labour and capital can be shown by a(n):

Because models make simplifying assumptions,they are of very little use in the real world.

A mortgage-backed security is an asset that:

"All other relevant factors remain unchanged" is another way of saying:

Use the following to answer questions : -(Figure: Consumer and Capital Goods)Use Figure: Consumer and Capital Goods.If the economy is operating at point Y and its relevant production possibility frontier is curve 1:

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale.In 1 day,Mark can make 40 brownies or 20 cookies,and Julie can make 15 brownies or 15 cookies.Based on this information,_____ has the comparative advantage in making brownies and _____ has the comparative advantage in making cookies.

Which statement is normative?

Use the following to answer questions : $\text {Table: Comparative Advantage I}$ Sweden and Finland produce only two goods, herring and cell phones, and this table shows the maximum amount that each nation can produce of the two goods. Sweden Finland Herring 100000 50000 Cell phones 10000 10000 -(Table: Comparative Advantage I)Use Table: Comparative Advantage I.The opportunity cost of producing one box of cell phones for Sweden is _____ box(es)of herring.

Use the following to answer questions : $\text {Scenario: Linear Production Possibility Frontier}$ $\text {Largetown has a linear production possibility frontier, and}$ $\text { it produces socks and shirts with 80 hours of labor. The}$ $\text { table shows the number of hours of labor necessary to}$ $\text {produce one pair of socks or one shirt.}$ Number of hours of labor to produce one shirt Number of hours of labor to produce one pair of socks 4 2 -(Scenario: Linear Production Possibility Frontier)Use Scenario: Linear Production Possibility Frontier.What is the maximum number of pairs of socks Largetown can produce?

Mary spends $5 on food for her cat.This is an example of a:

Use the following to answer questions : Figure: Strawberries and Submarines -(Figure: Strawberries and Submarines)Use Figure: Strawberries and Submarines.Suppose the economy is operating at point G.This implies that:

In the circular-flow diagram,households buy _____ in the _____ market.

If countries engage in international trade: