Microeconomics chapter 2

The ability of one producer to produce one good or service using fewer inputs than another producer is:

absolute advantage.

Refer to the figure. How many tons of textiles does Australia give up to produce one ton of nickel?

1/3

Use the figure in which both Mexico and the United States each have 24 units of labor. The opportunity costs of producing one shirt are:

1/6 of a computer for Mexico and one computer for United States.

Refer to the figure. What is the maximum amount of nickel China can produce?

8 tons

Refer to the figure. What is the maximum amount of textiles China can produce?

8 tons

David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true?

David and Cameron must have different preferences for the car.

Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that:

France should specialize in producing phones and import computers from Sweden.

Two countries that specialize where they have a comparative advantage and then trade with each other will experience increases in: I. wages in both countries. II. total output in both countries. III. living standards in both countries.

I, II, and III

Which of the following statements is TRUE?

Specialization and trade raise wages in both countries that are party to the trade.

According to the table on iPhone and iPod production, which of the following is TRUE?

The United States has an absolute advantage in producing both iPhones and iPods.

Suppose a famous baseball player, Alex Rodriguez, hires a high school student to paint his house. Which of the following is most likely TRUE?

The opportunity cost of painting a house is higher for Alex Rodriguez than for the high school student.

The following table contains the information necessary to construct a Production Possibility Frontier for a small country, that, for simplicity, only use its resources to produce wheat and smart phones. This country has 100 units of labor and needs 5 units of labor to produce a smart phone but only l unit of labor to produce a unit of wheat. Small Country: Opportunity Cost of 1 Smart Phone = 5 Wheat Opportunity Cost of 1 Wheat = 1/5 of a Smart Phone Part 1: Use the infinite line tool to plot the production possibility frontier for this small country and label it as the Production Possibility Frontier. Part 2: Use the point tool to identify the following three points: one that efficiently uses all of the country's resources; one that underutilizes resources in this country; and one that is impossible for this country to achieve. Label each of these points appropriately.

This country can produce either 20 smart phones or 100 units of wheat or some combination along its PPF. Inside the PPF is inefficient and outside the PPF is impossible.

Specialization and trade can _____ the per-unit cost of production because _____ .

decrease; it creates economies of scale associated with large-scale production

According to the theory of comparative advantage, the reason wages are lower in China than in the United States is:

lower productivity in China.

Division of knowledge refers to:

people learning different tasks in which they specialize.

Use the above figure in which both Mexico and the United States each have 24 units of labor. Mexico has a comparative advantage in ______ and the United States has a comparative advantage in ______.

shirts; computers

Use the figure in which both Mexico and the United States each have 24 units of labor. The opportunity costs of producing one computer are:

six shirts for Mexico and one shirt for the United States.

Globalization is:

the advance of human cooperation across national boundaries.

The production possibilities frontier shows:

the combinations of outputs a country can produce given its resources and productivity.