Exam 2: Model Building and Gains From Trade

The existing entries in the following table show the maximum quantities of milk shakes or fruit smoothies the college president and dining hall staffer could make during an afternoon shift, given a fixed amount of resources. a. Fill in the remaining part of the table (be sure to label the units) and answer the questions below. b. Who has a comparative advantage in producing smoothies? c. Who has an absolute advantage in producing milk shakes?

The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Which statement about comparative advantage is true?

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

Forgoing current consumption so that those resources can be used to produce new capital is called:

Consumer goods:

When one producer has a comparative advantage in production, she:

Greater investment in capital goods today leads to:

You have an absolute advantage in producing something whenever:

Michael and Angelo are both artists who can create sculptures or paint paintings each day. The following table describes their maximum outputs per day. Does either person have an absolute advantage?

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an:

Variables that are not accounted for in a model are called:

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Does either one have a comparative advantage?

Draw a production possibilities frontier (PPF) for Good A and Good B. Suppose that these goods are subject to increasing relative costs in production, and be sure that your graph reflects this fact. Now suppose that a new and innovative technology enhances the production of Good A but not Good B. Illustrate how this new innovation changes the production possibilities frontier (PPF).

Refer to the following figure to answer the next questions. -Which of the following represents a point that is unattainable with current resources and technology?

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next questions. -The set of efficient points is best described as:

Mrs. Abel has a comparative advantage in producing cabbage if, in comparison to Mrs. Bee, Mrs. Abel can grow cabbage:

The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?

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

Refer to the following table to answer the next questions. -Given an eight-hour workday, which statement best describes the absolute advantage evident in the table?

Economists use the scientific method and the tools of economics to study: