Economics - Homework 2

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. Refer to Figure 2-7. What is the opportunity cost of producing 1 pound of cashews in Indonesia? A. 3/8 bolts of cotton B. 5/8 bolts of cotton C. 2 2/3 bolts of cotton D. 320 bolts of cotton

2 2/3 bolts of cotton

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables? A. 3/4 pound of meat B. 1.2 pounds of meat C. 1 1/3 pound of meat D. 12 pounds of meat

3/4 pound of meat

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. Refer to Figure 2-7. What is the opportunity cost of producing 1 bolt of cotton in Indonesia? A. 3/8 pounds of cashews B. 5/8 pounds of cashews C. 2 2/3 pounds of cashews D. 120 pounds of cashews

3/8 pounds of cashews

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also producing, assuming that resources are fully utilized? A. 45 pounds of meat B. 75 pounds of meat C. 80 pounds of meat D. 100 pounds of meat

75 pounds of meat

Table 2-3 Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-3. If the two countries specialize and trade, who should export wheat? A. They should both be exporting wheat. B. There is no basis for trade between the two countries. C. South Korea D. China

China

Table 2-2 Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. Which of the following statements is true? A. Jack has an absolute advantage in lawn mowing and George in garden cultivating. B. Jack has an absolute advantage in garden cultivating and George in lawn mowing. C. Jack has an absolute advantage in both tasks. D. George has an absolute advantage in both tasks.

George has an absolute advantage in both tasks.

Table 2-3 Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-3. Does either China or South Korea have an absolute advantage and if so, in what product? A. South Korea has an absolute advantage in both products. B. China has an absolute advantage in wheat. C. South Korea has an absolute advantage in wheat. D. China has an absolute advantage in digital cameras.

South Korea has an absolute advantage in both products.

An example of a factor of production is A. the automobiles exported by an auto manufacturer. B. a loan granted to an auto manufacturer. C. a worker hired by an auto manufacturer. D. a car produced by an auto manufacturer.

a worker hired by an auto manufacturer.

The production possibilities frontier model assumes all of the following except A. any level of the two products that the economy produces is currently possible. B. the economy produces only two products. C. labor, capital, land and natural resources are fixed in quantity. D. the level of technology is fixed and unchanging.

any level of the two products that the economy produces is currently possible.

You have an absolute advantage whenever you A. can produce something at a lower opportunity cost than others. B. prefer to do one particular activity. C. can produce more of something than others with the same resources. D. are better educated than someone else.

can produce more of something than others with the same resources.

Table 2-3 Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-3. South Korea has a comparative advantage in the production of A. both products. B. wheat. C. neither product. D. digital cameras.

digital cameras.

A worker is hired in a A. government market. B. goods and services market. C. product market. D. factor market.

factor market.

Table 2-2 Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is George's opportunity cost of mowing a lawn? A. two-thirds of a garden cultivated. B. two lawns mowed C. one and a half lawns mowed D. half a garden cultivated

half a garden cultivated

Figure 2-1 Refer to Figure 2-1. Point A is A. the equilibrium output combination. B. unattainable with current resources. C. inefficient in that not all resources are being used. D. technically efficient.

inefficient in that not all resources are being used.

The slope of a production possibilities frontier A. is always varying. B. has no economic relevance or meaning. C. is always constant. D. measures the opportunity cost of producing one more unit of a good.

measures the opportunity cost of producing one more unit of a good.

Table 2-2 Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is Jack's opportunity cost of cultivating a garden? A. one and a half lawns mowed B. two lawns mowed C. two-thirds of a garden cultivated. D. half a garden cultivated

one and a half lawns mowed

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except A. engage in mutually beneficial trade with other nations. B. consume a combination of goods that lies outside its own production possibilities frontier. C. increase the variety of products that it can consume with no increase in resources. D. produce a combination of goods that lies outside its own production possibilities frontier.

produce a combination of goods that lies outside its own production possibilities frontier.

Households A. purchase resources in the product market. B. purchase final goods and services in the factor market. C. purchase final goods and services in the product market. D. purchase resources in the factor market.

purchase final goods and services in the product market.

Households A. sell goods in the product market. B. have no influence on the circular flow in a market economy. C. purchase resources in the factor market. D. sell resources in the factor market.

sell resources in the factor market.

Scarcity A. can be eliminated by rationing products. B. can be overcome by discovering new resources. C. is a bigger problem in market economies than in socialist economies. D. stems from the incompatibility between limited resources and unlimited wants.

stems from the incompatibility between limited resources and unlimited wants.

Figure 2-1 Refer to Figure 2-1. Point B is A. the equilibrium output combination. B. unattainable with current resources. C. technically efficient. D. inefficient in that not all resources are being used.

technically efficient.

Comparative advantage means A. the ability to produce more of a product with the same amount of resources than any other producer. B. the ability to produce a good or service at a lower opportunity cost than any other producer. C. compared to others you are better at producing a product. D. the ability to produce a good or service at a higher opportunity cost than any other producer.

the ability to produce a good or service at a lower opportunity cost than any other producer.

The principle of opportunity cost is that A. in a market economy, taking advantage of profitable opportunities involves some money cost. B. the cost of production varies depending on the opportunity for technological application. C. taking advantage of investment opportunities involves costs. D. the economic cost of using a factor of production is the alternative use of that factor that is given up.

the economic cost of using a factor of production is the alternative use of that factor that is given up.

The production possibilities frontier shows A. what an equitable distribution of products among citizens would be. B. what people want firms to produce in a particular time period. C. the various products that can be produced now and in the future. D. the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

Increasing marginal opportunity cost implies that A. the more resources already devoted to any activity, the benefits from allocating yet more resources to that activity decreases by progressively larger amounts. B. that rising opportunity costs makes it inefficient to produce beyond a certain quantity. C. the law of scarcity. D. the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Table 2-2 Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is George's opportunity cost of cultivating a garden? A. two lawns mowed B. two-thirds of a garden cultivated C. one and a half lawns mowed D. half a garden cultivated

two lawns mowed

Table 2-2 Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is Jack's opportunity cost of mowing a lawn? A. two lawns mowed B. two-thirds of a garden cultivated C. one and a half lawns mowed D. half a garden cultivated

two-thirds of a garden cultivated

Figure 2-1 Refer to Figure 2-1. Point C is A. is the equilibrium output combination. B. technically efficient. C. unattainable with current resources. D. inefficient in that not all resources are being used.

unattainable with current resources.

The resource income earned by those who supply labor services is called A. wages and salaries. B. stock options. C. bonus. D. profit.

wages and salaries.

Figure 2-5 Refer to Figure 2-5. If the economy is currently producing at point Y, what is the opportunity cost of moving to point W? A. zero B. 16 million tons of paper C. 2 million tons of steel D. 9 million tons of paper

zero