Microeconomics Ch. 2 Test
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
Serena Haley Bracelets 8 9 Necklaces 16 12 The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Haley's opportunity cost of making a bracelet?
1 1/3 necklaces
Fred Barney Pogo Sticks 24 28 Unicycles 8 14 The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. 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
Fred Barney Pogo Sticks 24 28 Unicycles 8 14 The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Which of the following statements is true?
Barney has a comparative advantage in making unicycles and Fred in making pogo sticks.
The table to the right shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Which of the following statements is true?
Barney has an absolute advantage in making both products.
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Which of the following statements is true?
Haley has a 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 an 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 semester-long economics class is
equal to the highest value of an alternative use of the time and money spent on the class.
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 costs.
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. Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear
outside 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 to 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-interest bring about a market outcome that benefits society as a whole.
Without an increase in the supply of the factors of production, how can a nation achieve economic growth?
through technological advancement which enables more output with the same quantity of resources
The points outside the production possibilities frontier are
unattainable
Which of the following is not a factor of production?
$1,000 in cash
Fred Barney Pogo Sticks 24 28 Unicycles 8 14 The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. What is Barney's opportunity cost of making a pogo stick?
1/2 of a unicycle
