2.1-2.4

Monday Island produces only tomatoes and papayas. Complete the following sentence. The marginal cost of a tomato is the number of papayas that​ ______ to get one more​ ______.

must be​ forgone; tomato

The United States devotes​ ______ of its resources to accumulating capital and the remainder to consumption. Hong Kong devotes​ ______ of its resources to accumulating capital and the remainder to consumption. As a​ result, Hong​ Kong's production possibilities have​ _______ the United States.

one fifth; one third expanded more quickly than

When we produce at the point on the PPF that we prefer above all other points we achieve​ ______ efficiency.

production;allocative

Economic growth is defined as the ​ _____ .

sustained expansion of production possibilities

In​ 1966, the production possibilities per person in the United States were more than​ ______ times those in Hong Kong.

three

Choose the correct statements. a. The opportunity cost of an action is the highest dash valued alternative forgone. nothing nothing b. Opportunity cost is a ratio. nothing nothing c. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF . nothing d. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis and the opportunity cost of producing an additional good measured on the y dash axis.

Statements a and b are correct

In one​ hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Suppose that Tessa buys a new machine for making jackets that enables her to make 35 jackets per hour.​ (She can still make only 70 caps per​ hour.) Now​ ______ has a comparative advantage in producing jackets. ​______ from trade. Sue and Tessa are​ _______ to trade 1 jacket for 7 caps because​ _______.

​Tessa; both Sue and Tessa gain no longer​ willing; Sue can produce jackets at an opportunity cost of 1 jacket for 5.0 caps

Preferences are​ _____.

​people's likes and dislikes and the intensity of those feelings

The marginal benefit curve is a curve that shows the relationship between the​ _____

marginal benefit from a good and the quantity consumed of that good

The marginal cost of a good or service is the​ _____.

opportunity cost of producing one more unit of it

​_______ efficiency occurs when we produce goods and services at the lowest possible cost. ​_______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit

production;allocative

In a​ high-income country like the United States​ _______.

technological advances release labor from industrial production and move the labor into service production

Technological change is​ _____ new goods and of​ _____ of producing goods and services.

the development​ of; of better ways

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people​ _____ - it is not possible to produce more of a good or service​ _____ some of another good that people​ _____.

value most​ highly; without giving​ up; value more highl

Allocative efficiency occurs when​ ______.

we are producing at a point on the PPF that we prefer above all other points

Failure to specialize and reap the games from trade is​ _______ because​ _______.

​inefficient; production is at a point inside the​ economy's PPF

Which of the following is an example of comparative advantage

Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

In one​ hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. ​Sue's opportunity cost of producing a cap is​ ______ jackets and​ Tessa's opportunity cost of producing a cap is​ ______ jackets. ​______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 ​caps, ______.

0.2;0.10 Tessa; both Sue and Tessa gain

Martha can produce 60 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 9 quilts or 18 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage ​______ has a comparative advantage in quilts.​ ______ has a comparative advantage in chocolate chip cookies.

Martha​_______ has an absolute advantage in both goods. jane;Martha

Big Lobster sells lobster and​ fish, and so too does H Salt. If Big Lobster​'s opportunity cost of preparing lobster exceeds Upper H Salt​'s opportunity cost of preparing​ lobster, then​ ______ If H Salt and Big Lobster decide to specialize and​ trade, then the source of the gains from the trade between H Salt and Big Lobster is​ _______.

H Salt has a comparative advantage in preparing lobster divergent opportunity cost

Brazil produces ethanol from sugar at a cost of​ $0.83 per gallon. The United States produces ethanol from corn at a cost of​ $1.14 per gallon. Sugar grown on one acre of land produces twice the quantity of ethanol as the corn grown on an acre. The United States imports 5 percent of its ethanol consumption and produces the rest itself. Since​ 2003, U.S. ethanol production has more than doubled and U.S. corn production has increased by 45 percent.

The opportunity cost of producing ethanol has increased since 2003.

Which of the following is the opportunity cost of attending a ball​ game

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time

Which of the following is an example of absolute advantage

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

Specialization and the gains from trade make the economy PPF outward bowed because​ _______.

a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs

How does economic growth change the patterns of​ production? In a​ low-income country,​ _________. As a country invests in capital and uses more advanced technologies​ _______.

agriculture accounts for a large percentage of total​ production; manufacturing becomes a greater percentage of total production and agriculture shrinks

The marginal benefit of a good or service is the​ _____.

benefit received from consuming one more unit of it

Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal​ _______ a pencil equals the marginal​ _______.

benefit​ from; cost of a pencil

The production possibilities frontier is the boundary between the combinations of goods and services that​ _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

Production efficiency is a situation in which the economy is getting all that it can from its resources and​ _____ produce more of one good or service without producing​ _____ of something else.

cannot;less

Economic growth comes from​ _______.

capital accumulation and technological advance

Why do people specialize and​ trade? With specialization and​ trade, people can​ _______

consume at a point outside their PPF

Marginal benefit​ ______.

describes preferences

Economic growth​ ______ overcome scarcity because​ ______.

does​ not; we can produce more goods and services but it is still impossible to satisfy all our wants

Capital accumulation is the​ _____, including​ _____ capital.

growth of capital​ resources; human

As a country experiences economic​ growth, investment in capital and advances in technology​ _________.

increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate

The opportunity cost of economic growth​ _______.

is fewer consumption goods today

In an​ hour, Simon can catch 10 pounds of tuna or pick 10 pounds of oranges. In an​ hour, Fred can catch 10 pounds of tuna or pick 20 pounds of oranges. The opportunity cost of catching a pound of tuna is​ ______ for Simon than for Fred​, and the opportunity cost of picking a pound of oranges is​ ______ for Simon than for Fred So​ ______ has a comparative advantage in producing​ ______.

lower;higher simon;tuna