Chapter 2 Macro Homework

Is the columnist arguing that Spain has an absolute advantage over China in producing textiles, a comparative advantage, or both? A. A comparative advantage in producing textiles B. An absolute advantage in producing textiles C. Both an absolute advantage and a comparative advantage in producing textiles D. Neither an absolute nor a comparative advantage in producing textiles.

A. A comparative advantage in producing textiles

Which of the following may have caused an upward shift? (all that apply) A. A larger labor force B. Balanced production between ships and food C. An increase in the capital stock D. The achievement of full employment E. Advances in technology.

A. A larger labor force C. An increase in the capital stock E. Advances in technology

The columnist notes​ that, in​ fact, Spain exports significant quantities of textiles. If his description of the situation in China and Spain is​ accurate, briefly explain how Spanish firms are able to export textiles in competition with Chinese firms. A. Spain must be able to produce textiles at a lower opportunity cost than China can B. Spanish firms must be able to produce textiles in larger quantities than China can. C. Consumers must have a stronger preference for textiles made in Spain than those made in China D. If China "is always better than Spain' in producing textiles, Spanish firms would not be able to compete with China.

A. Spain must be able to produce textiles at a lower opportunity cost than China can.

During the 1928 presidential election​ campaign, Herbert​ Hoover, the Republican​ candidate, argued that the United States should only import those products that could not be produced here. Do you believe that this would be a good​ policy? Explain. A. This is not a good policy because it does not necessarily result in countries producing those goods for which they have a comparative advantage B. This is not a good policy because it does not necessarily result in countries producing those goods for which they have an absolute advantage. C. This is not a good policy because it does not allow countries to import those goods that are scarce. D. This is a good policy because countries would only produce those goods that they can make at lower opportunity cost than other countries. E. This is a good policy because countries would only produce those goods that cannot be made elsewhere.

A. This is not a good policy because it does not necessarily result in countries producing those goods for which they have a comparative advantage.

A production possibilites frontier: A. shows the maximum attainable combinations of two goods that may be produced with available resources B. shows how unlimited wants exceed the limited resources available to fulfill those wants. C. shows the act of buying and selling D. shows how participants in the market are linked. E. shows the market for a good or service.

A. shows the maximum attainable combinations of two goods that may be produced with available resources

We can shoe economic efficiency: A. with points on the production possibilities frontier. B. with point inside and on the production possibilities frontier C. with points outside the production possibilities frontier D. with points inside the production possibilities frontier E. with points on and outside the production possibilities frontier.

A. with points on the production possibilities frontier

A columnist for Forbes argues that: "Even if China is always better than Spain at producing textiles, if the best thing that Spain could be doing is textiles then that's what Spain should be doing." What does the columnist mean y writing China "is always better than Spain" in producing textiles (which include clothing, sheets, and similar products)? A. China can produce textile products that are of higher quality than those produced in Spain B. China can produce textiles at a lower cost in terms of resources than Spain can. C. Spain will not produce any textiles because China is always better. D. Consumers have a stronger preference for textiles made in China than those made in Spain

B. China can produce textiles at a lower cost in terms of resources than Spain can.

Suppose we can divide all the goods produced by an economy into two types: consumption goods and capital goods. Capital goods, such as machinery, equipment, and computers, are goods used to produce other goods. Is it likely that the PPF in this situation would be a straight line: A. The PPF would likely be a straight line because not all resources are equally well suited to produce both consumption and capital goods. B. The PPF would likely be bowed out because not all resources are equally well suited to produce both consumption and capital goods C. The PPF would likely be a straight line because resources are likely equally well suited to produce both consumption and capital goods D. The PPF would likely be bowed out because resources are likely equally suited to produce both consumptions and capital goods .

B. The PPF frontier would likely be bowed out because not all resources are equally well suited to produce both consumption and capital goods.

Consider a PPF that shows the trade off between the production of cotton (on the y axis) and the production of soybeans (on the x-axis) What effect would a prolonged drought have on the initial production possibilities frontier? If there is a prolonged drought, then the PPF will A. shift in along the cotton axis B. shift in along both axes C. shift along the soybean axis D. remain unchanged.

B. shift in along both axes

Does Staples incur a cost from using some of the space in its retail stores for office workspaces? If Staples does incur a cost, briefly explain what the cost would be. A. No, it does not incur any additional cost because office workspace for small business owners are scarce B. No, if Staples is able to sell all its surplus filing cabinets and other products, then it would not incur an costs C. Yes, Staples incurs an opportunity cost because the store space is not a factor of production D. Yes, if the surplus space could be used for some other alternative use, then Staples incurs an opportunity cost.

D. Yes, if the surplus space could be used for some other alternative use, then Staples incurs an opportunity cost

The production possibilities frontier will shift outward A. if resources are used to produce consumption goods B. if technology declines C. if production occurs outside the production possibilities frontier D. if resources are not used in production E. if resources are used to produce capital goods.

E. if resources are used to produce capital goods.

We can shoe economic inefficiency: A. with points outside the production possibilities frontier B. with points on and outside the production possibilities frontier. C. with points on the production possibilities frontier. D. with point inside and on the production possibilities frontier E. with points inside the production possibilities frontier

E. with points inside the production possibilities frontier