Exam 2: Model Building and Gains From Trade

Draw a production possibilities frontier (PPF) that shows a pizza shop's production trade-offs between producing pizzas and stromboli. Suppose the pizza shop upgrades to a larger, more-automated oven. On the same graph, show how the PPF changes. (The oven is used to bake both pizzas and stromboli.)

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the next questions. -What is Pam's opportunity cost of making 1 stromboli?

A positive statement:

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next questions. -Which statement best describes absolute advantage?

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the next questions. -What is Angelo's opportunity cost of a painting?

On the television show "MythBusters," the hosts design experiments, collect data, and test theories based on popular myths. This is an example of:

When one producer can create more of a good than another producer using the same quantity of resources, the first producer has:

Refer to the following figure to answer the next questions. -Which point in the corresponding figure shows that productive resources are not fully employed?

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the next questions. a. Graph A b. Graph B c. Graph C d. Graph D e. Graph E -Suppose a great plague wipes out half of the society's population. Which of the following graphs best depicts how this would affect the PPF?

A society that is producing its maximum combination of goods and using all available resources for production:

Suppose that, during your afternoon shift working at the library, you could either reshelve books or process interlibrary loan (ILL) requests. Draw a production possibilities frontier (PPF) that describes your production trade-offs. Your production of each of these goods is subject to increasing relative costs in production, so be sure that your graph reflects this fact. Now suppose that a new online request system increases your efficiency at processing ILL requests but does not affect your reshelving ability. Show, on the same graph, how this new innovation changes the PPF.

Refer to the following table to answer the next questions. -Suppose that Alicia Keys and Jay-Z could each make either New York-style pizza or Philly cheesesteaks. Given an eight-hour workday, which of the following would permit them to consume outside their respective production possibilities frontiers (PPFs)?

Car companies build wind tunnels to test the aerodynamics and the handling capabilities of their car designs. The many variables that can be precisely controlled inside the wind tunnel are considered:

Refer to the following figure for the next questions. -The opportunity cost of increasing production of apple pies from 14 to 16 pies is:

The scientific method and the tools of economics are useful in examining:

What assumptions do economists make when developing a production possibilities frontier (PPF)?

Why do economists use models?

Explain how scarcity is the root cause of the trade-offs and opportunity cost illustrated in the production possibilities frontier (PPF).

Variables that are controlled for in a model are called:

An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an: