Exam 2: Model Building and Gains From Trade

Suppose you find a production possibilities frontier (PPF) that is shaped like a straight line. What can you determine about the production of the two goods?

Refer to the following figure for the next three questions. -The opportunity cost of increasing production of blueberry pies from 7 to 11 pies is:

Refer to the following figure for the next three questions. -The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:

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

Consumer goods:

Refer to the following figure to answer the questions. -Which of the following represents an inefficient point?

Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?

Refer to the accompanying figure to answer the next four questions. -Unemployed resources are evident at:

Which statement best describes the absolute advantage as shown in the graphs?

Which of the following is necessary to build a good economic model?

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

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

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

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 process of using current resources to create new capital is:

Refer to the following figure to answer the questions. -What is the most preferred consumption point for a pie-appreciating society?

Economic growth can be depicted on a production possibilities frontier (PPF) as an:

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

Suppose that, during an afternoon at your favorite ski resort, you could either make additional runs down the slopes or produce and sip hot chocolate by the fire in the lodge. Draw a production possibilities frontier (PPF) that describes your production trade-offs between runs skied (by riding the chairlift to the top and skiing down the slope) versus cups of hot chocolate produced and sipped. Your production of each of these goods is subject to constant marginal opportunity costs in production, so be sure that in your graph, the opportunity cost of one activity in terms of the other is the same at any point on the PPF. Now suppose that a new superfast ski lift reduces the time it takes to get to the top of the mountain. Show, on the same graph, how this changes the PPF.

Greater investment in capital goods today leads to: