Exam 2: Model Building and Gains From Trade

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next questions. -Given current resources and technology, the attainable range is best described as:

If Elaine can produce more output from a set amount of resources than Jerry can, you know that:

You are planning to add new mulch to all the landscaping beds around your house. You have determined the quantity of mulch you will need and have identified these two options for getting the mulch to your house: 1. You can have all the mulch delivered to your yard in one dump truck for $450. 2. You can make four trips to the garden center with your pickup truck and haul it yourself. It will cost you $75 per load for the mulch, plus $25 in fuel and truck wear per load. You estimate it will take about five hours to haul and unload all four loads. What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?

Over the last 20 years, countries such as India and China have:

Refer to the following figure to answer the next questions. -In the figure, point A is:

To determine which of two producers has a comparative advantage, you would need to know their:

Refer to the accompanying figure to answer the next questions. -How is opportunity cost illustrated?

Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?

Consider the following scenario to answer the next questions: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. -What is Rachel's opportunity cost of baking 1 loaf of bread?

Which of the following is a normative statement?

Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Refer to the following figures to answer the next questions. -Which allocation point in the short-run production possibilities frontier (PPF) will lead to the most significant growth in the long-run PPF?

Is there an opportunity cost to increased investment in capital goods today?

In the movie A Knight's Tale, three peasants win a jousting tournament and must decide whether they should enjoy most of their winnings now or use most of it for training to improve their future jousting performance. Use appropriate production possibilities frontiers (PPFs) and words to describe the investment trade-off they face.

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

For both parties to benefit from specialization and trade, the trading parties must agree on:

The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called:

What does it mean when society is operating inside the production possibilities frontier (PPF)?

Why might Shaquille O'Neal, a 7'1" former National Basketball Association (NBA) player, hire professional movers to help him move, even though his size and strength likely make him more proficient (better) at furniture moving than the professionals he may hire?

Why doesn't our society invest more resources into the production of capital goods to enhance the level of growth in our future production possibilities frontier (PPF)?