Chapter 2 Economics

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

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

When you purchase a new pair of jeans you do so in the

product market

Which of the following is not a factor of​ production?

$1,000 cash

If Mendonca chooses to produce 160 pounds of​ vegetables, how much meat can it produce to maximize​ production?

0 pounds of meat

What is Haley's opportunity cost of making a bracelet?

1 1/3 necklaces

What is​ Serena's opportunity cost of making a​ necklace?

1/2 of a bracelet

What is​ Barney's opportunity cost of making a pogo​ stick?

1/2 unicycle

What is​ Serena's opportunity cost of making a​ bracelet?

2 necklaces

What is​ Barney's opportunity cost of making a​ unicycle?

2 pogo sticks

What is​ Fred's opportunity cost of making a​ unicycle?

3 pogo sticks

If the economy is currently producing at point W​, what is the opportunity cost of moving to point X​?

5 million tons of paper

Refer to the diagram to the right which shows the production possibilities frontier for​ Mendonca, an agrarian nation that produces two​ goods, meat and vegetables. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also​ producing, assuming that resources are fully​ utilized?

75 pounds of meat

Which of the following statements is true​?

Barney has a comparative advantage in making unicycles and Fred in making pogo sticks

Which of the following is true?

Barney has an absolute advantage in making both products

Which of the following statements is ​true?

Haley has comparative advantage in making bracelets and Serena in making necklaces

___is(are) inefficient in that not all resources are being used

Point A

Comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer

You have no absolute advantage whenever you

can produce more of something than others with the same resources

An outward shift of a​ nation's production possibilities frontier represents

economic growth

The opportunity cost of taking a semesterminus−long economics class is

equal to the highest value of an alternative use of the time and money spent on the class.

Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in the figure above represent his production possibilities​ frontier?

graph A

The production possibilities frontier model shows that

if all resources are fully and efficiently​ utilized, more of one good can be produced only by producing less of another good.

A production possibilities frontier with a bowed outward shape indicates

increasing opportunity costs as more and more of one good is produced

If society decides it wants more of one good and all resources are fully​ utilized, then

it has to give up some of another good and incur some opportunity cost

If the production possibilities frontier is​ ________, then opportunity costs are constant as more of one good is produced.

linear

The production possibilities frontier shows the​ ________ combinations of two products that may be produced in a particular time period with available resources.

maximum attainable

Refer to the table to the right. Assume​ Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear

outside of Tomaso's production possibilities frontier

The primary purpose of​ ________ is to encourage the expenditure of funds on research and development to create new products.

patents and copyrights

Refer to the diagram in the right. Point B is

technically efficient

The term​ 'property rights' refers to

the ability to exercise control over one's own resources within the confines of the law

Adam Smith's invisible hand refers to

the process by which individuals acting in their own self-interesting bring about a market outcome that benefits society as a whole

Without an increase in the supplies of factors of production, how can a nation achieve economic growth?

through technological advancements which enables more output with the same quantity of resources

The points outside the production possibilities frontier are

unattainable

Refer to the diagram to the right. Point C is

unattainable with current resources

If the economy is currently producing at point Y​, what is the opportunity cost of moving to point W​?

zero