econs hw review 1

Suppose the following represents the Canadian production possibilities frontier for two of its most important exports: maple syrup (in millions) and tree logs (in millions). Please choose the best answer for each question.

Point H: is possible, but not efficient Point M: is possible and efficient Point Y: is not possible and is unobtainable, unless international trade occurs.

In a competitive market, all of the choices along the production possibility frontier display ______________ efficiency, while the specific choice on the frontier that society picks is the one with _______________ efficiency.

Productive; Allocative

In the field of economics, scarcity is a primary concern. Thinking about scarcity in terms of the economic way of thinking, why does scarcity exist? Select the most complete definition.

Scarcity exists because people virtually have unlimited wants and because the earth has a limited supply of land, labor, capital and entrepreneurial ability.

Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks\' time. Vincent can bake 10 cakes or make 5 pizzas in an hour. Jean can bake 12 cakes or make 8 pizzas in an hour. Please answer the four questions below. 1. Which cook has the absolute advantage in baking cakes? 2. Which cook has the absolute advantage in making pizzas? 3. Which cook has the comparative advantage in baking cakes? 4. Which cook has the comparative advantage in making pizzas?

1. Jean 2. Jean 3. Vincent 4. Jean

Assume England and Libya can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries. Each farmer in England can produce 10 metric tons of grain or 5 metric tons of dates in a season. Each farmer in Libya can also produce 10 metric tons of grain or 25 metric tons of dates. Please answer the four questions below. 1. Which country has the absolute advantage in producing dates? 2. Which country has the absolute advantage in producing grain? 3. Which country has the comparative advantage in producing dates? 4. Which country has the comparative advantage in producing grain?

1. Libya 2. Neither 3. Libya 4. England

A farmer produces both beans and corn on her farm. If she must give up 16 bushels of corn to be able to get 6 bushels of beans, then her opportunity cost of 1 bushel of beans is ______________

2.67 bushels of corn

Determine if the following items represent an example of positive economics or normative economics. A. The richest 1% of Americans should pay more taxes than the rest of the 99%. B. A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient. C. The higher the minimum wage, the higher the price of goods and services is likely to be. D. Social welfare spending in Sweden occupies too large a portion of the national budget.

A. Normative Economics B. Positive Economics C. Positive Economics D. Normative Economics

Which of the following is NOT an example of a resource?

Firms

These figures illustrate the production possibilities available to Kate and Sarah with 8 hours of labor in their bakery. Answer the following question according to these figures.

Kate has an absolute advantage in: neither good Sarah has an absolute advantage in: both goods

Christine and Paul are deciding how to split their time between writing music and lyrics for their new album. Their PPFs for 72 hours of work are shown below. Christine and Paul have to write music for 8 songs and lyrics for 12 songs (4 songs already have music). When they are done, they can go to a private island and relax from all their hard work. It is possible that they will use more than 72 hours. Once they start writing lyrics and music, assuming their hired help packs for them and their plane is waiting outside their door, in how many hours can they board the plane to their relaxing island getaway?

Hours: 96 Christine will write music for 0 songs Paul will write music for 8 songs Christine will write lyrics for 12 songs Paul will write lyrics for 0 songs

The following figures illustrate the production possibilities available to Kate and Sarah with 8 hours of labor in their bakery. Answer the following question according to these figures.

Kate has a comparative advantage in: Cake Sarah has a comparative advantage in: Bread

Suppose that the video game company, Ultravision, releases a new game called "Call of Obligation: Modern Combat 3." This can be analyzed using tools from both microeconomics and macroeconomics. Classify the items below according to whether they are an application in microeconomics or macroeconomics.

Microeconomics: How does Ultravision choose to market "Call of Obligation"? How much will Ultravision charge for "Call of Obligation"? How much will Ultravision pay the developers of the game? Is Ultravision able to sell all of the "Call of Obligation" games it produces or do they need to produce more?

Select the correct definition of the term "comparative advantage."

The ability to produce a good or service at a lower opportunity cost than another.

The five dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift card to buy yourself dinner at Burger Joint or you can stay home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-cooked meal?

The value of the ingredients that go into the home-cooked meal and the value of a five-dollar dinner at Burger Joint .

Assume the economy can produce either sports utility vehicles (SUVs) or minivans. The graph below depicts the current production possibilities frontier (PPF). Suppose the economy experiences a large increase in immigration. Move the end points of the PPF below to show how the PPF changes. Assume that the increase in immigration affects the economy\'s ability to produce both minivans and SUVs.

This is an example of: economic growth

Why is the shape of the production possibilities frontier (PPF) often curved instead of straight?

Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for.

Which term below best describes the situation that, relative to England, France can produce beef at a lower cost of production (i.e. can produce beef using fewer inputs)?

absolute advantage

The table below presents information about the productivity of digital cameras and personal computers in the United States and Japan. The data are presented in units of output per hour of work. Use this information to answer the following multiple choice question. Japan has a(n) ______ advantage in producing ________ .

absolute; personal computers

Suppose two economists are debating tax reform bill. Both economists agree that the bill would increase the after-tax income of the top 5% of income earners. However, they disagree on whether the bill would improve the tax system. Which of the following is the most plausible reason for why these economists disagree?

differences in values

Absolute advantage can be determined by comparing different producers ________

input requirements per unit of output

When trading with more developed countries

less developed countries have a comparative advantage in the production of some goods or services

Economics is the

study of the consumption, production, and distribution of goods and services.

An economy is

the system society uses to coordinate productive activities.

According to this graph of the production possibilities frontier (PPF), what is the opportunity cost of producing the fifth widget?

three gizmos

Kate and Sarah own a bakery together. The two figures illustrate the production possibilities available to them if they work at their bakery for 8 hours a day. Answer the following question using these figures. If Kate and Sarah both specialize in the good in which they have a comparative advantage, the ________

total production of bread will be 12 and the total production of cake will be 8.