Exam 2: Model Building and Gains From Trade

Refer to the following figure to answer the questions. -Which point in the corresponding figure represents a combination of smoothies and milk shakes that society cannot currently produce?

Opportunity cost is evident on the production possibilities frontier (PPF) graph:

Suppose the plow is invented and agricultural productivity greatly increases. Which of the following graphs best depicts how this would affect the PPF?

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

Specialization and trade allow individuals to:

Refer to the following table to answer the questions. New York Pizzas Philly Cheesesteaks Jay-Z 40 120 Alicia Keys 50 125 -Suppose that Alicia Keys and Jay-Z could each make either New YorkÐstyle 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)?

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).

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

Consider the following scenario to answer the 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?

The important act of holding all other variables constant while examining a particular variable is known as:

The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Suppose Jim is a brilliant attorney who can draft especially persuasive legal briefs. He also happens to possess some excellent administrative skills such as typing, filing, assembling binders and notes, and making reservations. Which best describes whether Jim should hire an administrative assistant to help him?

Refer to the accompanying figure to answer the next four questions. -The inefficient point(s) is (are):

You are considering the "dress well, test well" theory, which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants. If you want to test this theory over the course of the semester, which of the following would be an endogenous factor in your experiment?

Which of the following is a normative statement?

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

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

Given the same quantity of resources, what is Jay-Z's opportunity cost of producing a New York pizza?

-According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause:

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? Sculptures Paintings Michael 10 5 Angelo 6 2