Question 1

In economic terminology, what is the meaning of investment?

Accepted Answer

Investment is the process of u

Question 2

Explain the difference between absolute advantage and comparative advantage.

Accepted Answer

A person has an absolute advantage in th

Question 3

What does a production possibility frontier represent?

Accepted Answer

A production possibility front

Question 4

Refer to the information provided in Scenario 4 below to answer the questions that follow.
SCENARIO 4: Suppose that a state needs to build both prisons and schools with a budget limited to 10 million dollars. Schools cost $1 million each to build and prisons cost $2 million each to build.
-Refer to Scenario 4. Assume that the price of a prison falls to $1.5 million and that the price of school production rises to $2 million each. Draw the new production possibilities frontier. What is the new opportunity cost of producing one more prison?

Accepted Answer

In the new situation, the oppo

Question 5

What is the difference between capital goods and consumer goods?

Accepted Answer

Capital goods are goods that w

Question 6

What is the difference between a command economy and a laissez-faire economy?

Accepted Answer

The major difference lies in how the two

Question 7

-Refer to Scenario 3. Compute the opportunity cost of building two more huts in one day.

Accepted Answer

First we start off by calculat

Question 8

Assume that yields on bonds (rate of return) begin to fall while the stock market is booming, what should we see happen to the demand and price of stocks and why? What can we say about the opportunity cost of holding on to bonds in this situation?

Accepted Answer

Lower bond yields will push many investo

Question 9

Refer to the information provided in Scenario 1 below to answer the following questions.
SCENARIO 1: Consider the following data for the harvest of crabs versus the harvest of fish off the coast of Virginia in answering the following questions.
  
-Refer to Scenario 1. What is the economic significance of 25 fish captured and 25
crabs captured?

Accepted Answer

The economic significance of capturing 2

Question 10

Evaluate the following two statements:
"He is income rich but he is not very wealthy"
"He is income poor but he is wealthy"

Accepted Answer

The first person might be making a lot o

Question 11

Without drawing a graph explain what probably happened to the production possibility frontier during the Black Plague.

Accepted Answer

The Black Plague killed off about one-th

Question 12

Refer to the information provided in Scenario 1 below to answer the following questions.
SCENARIO 1: Consider the following data for the harvest of crabs versus the harvest of fish off the coast of Virginia in answering the following questions.
  
-Refer to Scenario 1. Assume this economy could either be at Point B or Point C. From which of these points is it more costly to produce more crabs? Explain your answer.

Accepted Answer

It's more costly to produce more crabs f

Question 13

The following table shows output per hour for Martha and Stewart who make gift baskets and potholders:
   What is the opportunity cost of a gift basket for Martha? What is the opportunity cost of a gift basket for Stewart? Who has a comparative advantage in producing gift baskets? How can you tell?

Accepted Answer

The opportunity cost of a gift basket fo

Question 14

The following table shows output per hour for Fred and Barney who mow lawns and trim hedges:
   What is the opportunity cost of mowing a lawn for Fred? What is the opportunity cost of trimming a hedge for Fred? Who has a comparative advantage in mowing lawns? How can you tell?

Accepted Answer

The opportunity cost of mowing a lawn fo

Question 15

Explain why some researchers conclude that Americans are becoming more obese because of the existence of fast-food restaurants. If fast-food restaurants have been around for over 50 years why is the trend toward obesity only a recent one? Explain.

Accepted Answer

Essentially fast-food restaurants have b

Question 16

Refer to the information provided in Scenario 4 below to answer the questions that follow.
SCENARIO 4: Suppose that a state needs to build both prisons and schools with a budget limited to 10 million dollars. Schools cost $1 million each to build and prisons cost $2 million each to build.
-Refer to Scenario 4. What is the maximum number of schools that can be built? The maximum number of prisons?

Accepted Answer

Ten is the maximum n

Question 17

The table below represents five points on the production possibility frontier for the small country of Bistro, which produces only crackers (measured in thousands of boxes) and cheese (measured in thousands of pounds):
   Does the production possibility frontier demonstrate the law of increasing opportunity cost? How can you tell?

Accepted Answer

No. The opportunity cost of increasing t

Question 18

What are the implications for economic growth for countries specializing in consumer goods rather than capital goods? Assume the countries consume what they produce.

Accepted Answer

All else equal, countries that specializ

Question 19

Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."

Accepted Answer

Assuming that the individual had no othe

Question 20

-Refer to Scenario 3. What is the maximum potential increase in coconut production and maximum potential increase in hut production described in the previous question?

Accepted Answer

The maximum potentia

In economic terminology, what is the meaning of investment?

Explain the difference between absolute advantage and comparative advantage.

What does a production possibility frontier represent?

What is the difference between capital goods and consumer goods?

What is the difference between a command economy and a laissez-faire economy?

-Refer to Scenario 3. Compute the opportunity cost of building two more huts in one day.

Assume that yields on bonds (rate of return) begin to fall while the stock market is booming, what should we see happen to the demand and price of stocks and why? What can we say about the opportunity cost of holding on to bonds in this situation?

Evaluate the following two statements: "He is income rich but he is not very wealthy" "He is income poor but he is wealthy"

Without drawing a graph explain what probably happened to the production possibility frontier during the Black Plague.

The following table shows output per hour for Martha and Stewart who make gift baskets and potholders: What is the opportunity cost of a gift basket for Martha? What is the opportunity cost of a gift basket for Stewart? Who has a comparative advantage in producing gift baskets? How can you tell?

The following table shows output per hour for Fred and Barney who mow lawns and trim hedges: What is the opportunity cost of mowing a lawn for Fred? What is the opportunity cost of trimming a hedge for Fred? Who has a comparative advantage in mowing lawns? How can you tell?

Explain why some researchers conclude that Americans are becoming more obese because of the existence of fast-food restaurants. If fast-food restaurants have been around for over 50 years why is the trend toward obesity only a recent one? Explain.

What are the implications for economic growth for countries specializing in consumer goods rather than capital goods? Assume the countries consume what they produce.

Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."

-Refer to Scenario 3. What is the maximum potential increase in coconut production and maximum potential increase in hut production described in the previous question?

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Exam 2: The Economic Problem: Scarcity and Choice

In economic terminology, what is the meaning of investment?

Explain the difference between absolute advantage and comparative advantage.

What does a production possibility frontier represent?

What is the difference between capital goods and consumer goods?

What is the difference between a command economy and a laissez-faire economy?

-Refer to Scenario 3. Compute the opportunity cost of building two more huts in one day.

Assume that yields on bonds (rate of return) begin to fall while the stock market is booming, what should we see happen to the demand and price of stocks and why? What can we say about the opportunity cost of holding on to bonds in this situation?

Evaluate the following two statements: "He is income rich but he is not very wealthy" "He is income poor but he is wealthy"

Without drawing a graph explain what probably happened to the production possibility frontier during the Black Plague.

The following table shows output per hour for Martha and Stewart who make gift baskets and potholders: What is the opportunity cost of a gift basket for Martha? What is the opportunity cost of a gift basket for Stewart? Who has a comparative advantage in producing gift baskets? How can you tell?

The following table shows output per hour for Fred and Barney who mow lawns and trim hedges: What is the opportunity cost of mowing a lawn for Fred? What is the opportunity cost of trimming a hedge for Fred? Who has a comparative advantage in mowing lawns? How can you tell?

Explain why some researchers conclude that Americans are becoming more obese because of the existence of fast-food restaurants. If fast-food restaurants have been around for over 50 years why is the trend toward obesity only a recent one? Explain.

What are the implications for economic growth for countries specializing in consumer goods rather than capital goods? Assume the countries consume what they produce.

Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."

-Refer to Scenario 3. What is the maximum potential increase in coconut production and maximum potential increase in hut production described in the previous question?

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters