Homework 2

If the two countries specialize and trade, who should export cell phones?

Finland

If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the

factor market

In the circular flow diagram, economic agents M represents

households

Adams Smith_______refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

invisible hand

If the production possibilities frontier is linear, then

opportunity cost are constant as more of one good is produced

An outward shift of a nations production possibilities frontier can occur due to

an increase in the labor force.

The _______ productions points on a production possibilities frontier are the points along and inside the production possibilities frontier.

attainable

Specializing in the production of a good or service in which one has the comparative advantage enables a country to do which of the following

consume a combination of goods that lies outside its own production possibilities

A critical function of the government is facilitating the operation of a market economy is

setting up and enforcing private property rights

Increasing marginal opportunity cost implies that

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

The circular flow model demonstrates

the roles played by households and firms in the market system.

Which of the countries does not come close to the free market benchmark?

Cuba

If Blake can pick more cherries in one hour than Cody, then Blake has a comparative advantage in cherry picking.

False

If a county is producing efficiently and is on the production possibilities frontier, the only way to produce more of one good is with and advance in technology.

False

Which country has the comparative advantage in the production of coconuts?

Guatemala

A welding machine is an example of a factor of production if it is being used to produce automobiles.

True

If a country produces only two goods, it is possible to have an absolute advantage in the production of both goods.

True

What is the opportunity cost of one dozen roses.

.4 dozen orchards

Published in 1776, ______was written by Adam Smith.

An inquiry into the nature and cause of the Wealth of nations.

For each watch that Switzerland produces

Switzerland has the comparative advantages in watches.