Microeconomics, Chapter 2

The theory of comparative advantage says that countries

Should export those goods they can produce at a lower opportunity cost than another country

An increase in the quantity and or quality of labor available could be due to each of the following except

Strict immigration policy enforcement

David Ricardo

Suggested that countries would benefit from trade

Select the correct definition of the term comparative advantage

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

For a country to have a comparative advantage any good, it must have

A lower opportunity cost of producing that good

labor

Anika, a server at sonic drive in Your coworkers Your favorite bartender

Entrepreneurs

Aunt Sally's jammin jellies ( the business) Brandon's Taco truck (the idea)

A market economy is also known as a blank? economy, and decisions are made by ?

Capital list; private individuals

Land as a productive resource does not include:

Computers

The limits on international trade include all of these except:

Decreasing opportunity cost and increasing returns

Which of these encourages economic growth?

Education

Which resource earns profits

Entrepreneurs

Which statement about entrepreneurs is not correct?

Entrepreneurs do not take on any Business risks

As used by economist, the term capital includes the human talent one is born with

False

Capital refers to the total amount of money and hedge and venture capital funds

False

Natural resources, such as water are included in capital resources

False

The resource category capital refers to financial assets, such as bank accounts, bonds, certificates of deposits, and stocks.

False

Capital

Farmer Cameron's tractor Brandon's Taco truck ( the truck itself)

If a producer has a comparative advantage, then she has selected the activity that

Has the lowest opportunity cost

Which of these results in a higher standard of living

Higher levels of education

International trade

Increases consumption possibilities

Natural resources such as copper deposits are

Land

When training with more developed countries,

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

According to a recent study by the organization for economic cooperation and development which of these results in a higher standard of living

Lower inflation rate

Which of these is not an economic factor of production

Money

A change from a technically or productively inefficient mix to an efficient mix of output would best be represented with a production possibility frontier as a

Movement from inside the PPF onto the PPF

If the government has been decided to spend less on the military and more on healthcare, the forgone spending on military items represents the:

Opportunity cost of the extra healthcare

land

Ore The Rio Grande Lake Tahoe

Full employment on a production possibilities frontier is shown by

Points on the PPF

Which is not an example of a behavior exhibited in a market economy?

The president of the European country of semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers

Which statement explains the trade off between today's consumption and future consumption

The production of more capital goods and fewer consumer goods today increases economic growth and future consumption

The derivation of a production possibility frontier assumes that

There is a fixed quantity of resources and technology available

A production possibilities frontier will have a curved or bowed out shape if opportunity cost are increasing

True

If countries specialize and then traded, world production would increase

True

The resource category entrepreneurial ability refers to business skills such as the management of resources, the drive to innovate, and the willingness to bear risk

True

The resource category labor refers to the mental and physical productivity of workers

True

The resource category land refers to all natural resources, including fertile land, forest, mineral deposits, solar and wind energy, and water

True

Which is not one of the three basic economic questions that each society must answer

Who decides what goods and services are in demand

All of these are considered human capital, except

Working in a factory

Market oriented activities- planned economy activities

•Buyers and sellers make all production and consumption decisions •The government attempts to induce certain production and consumption decisions using monetary incentives •The government regulate some production and consumption decisions •The government makes all production and consumption decisions