2.1-2.4
Monday Island produces only tomatoes and papayas. Complete the following sentence. The marginal cost of a tomato is the number of papayas that ______ to get one more ______.
must be forgone; tomato
The United States devotes ______ of its resources to accumulating capital and the remainder to consumption. Hong Kong devotes ______ of its resources to accumulating capital and the remainder to consumption. As a result, Hong Kong's production possibilities have _______ the United States.
one fifth; one third expanded more quickly than
When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.
production;allocative
Economic growth is defined as the _____ .
sustained expansion of production possibilities
In 1966, the production possibilities per person in the United States were more than ______ times those in Hong Kong.
three
Choose the correct statements. a. The opportunity cost of an action is the highest dash valued alternative forgone. nothing nothing b. Opportunity cost is a ratio. nothing nothing c. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF . nothing d. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis and the opportunity cost of producing an additional good measured on the y dash axis.
Statements a and b are correct
In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Suppose that Tessa buys a new machine for making jackets that enables her to make 35 jackets per hour. (She can still make only 70 caps per hour.) Now ______ has a comparative advantage in producing jackets. ______ from trade. Sue and Tessa are _______ to trade 1 jacket for 7 caps because _______.
Tessa; both Sue and Tessa gain no longer willing; Sue can produce jackets at an opportunity cost of 1 jacket for 5.0 caps
Preferences are _____.
people's likes and dislikes and the intensity of those feelings
The marginal benefit curve is a curve that shows the relationship between the _____
marginal benefit from a good and the quantity consumed of that good
The marginal cost of a good or service is the _____.
opportunity cost of producing one more unit of it
_______ efficiency occurs when we produce goods and services at the lowest possible cost. _______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit
production;allocative
In a high-income country like the United States _______.
technological advances release labor from industrial production and move the labor into service production
Technological change is _____ new goods and of _____ of producing goods and services.
the development of; of better ways
Allocative efficiency is a situation in which the quantities of goods and services produced are those that people _____ - it is not possible to produce more of a good or service _____ some of another good that people _____.
value most highly; without giving up; value more highl
Allocative efficiency occurs when ______.
we are producing at a point on the PPF that we prefer above all other points
Failure to specialize and reap the games from trade is _______ because _______.
inefficient; production is at a point inside the economy's PPF
Which of the following is an example of comparative advantage
Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.
In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets. ______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______.
0.2;0.10 Tessa; both Sue and Tessa gain
Martha can produce 60 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 9 quilts or 18 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.
Martha_______ has an absolute advantage in both goods. jane;Martha
Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds Upper H Salt's opportunity cost of preparing lobster, then ______ If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.
H Salt has a comparative advantage in preparing lobster divergent opportunity cost
Brazil produces ethanol from sugar at a cost of $0.83 per gallon. The United States produces ethanol from corn at a cost of $1.14 per gallon. Sugar grown on one acre of land produces twice the quantity of ethanol as the corn grown on an acre. The United States imports 5 percent of its ethanol consumption and produces the rest itself. Since 2003, U.S. ethanol production has more than doubled and U.S. corn production has increased by 45 percent.
The opportunity cost of producing ethanol has increased since 2003.
Which of the following is the opportunity cost of attending a ball game
The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time
Which of the following is an example of absolute advantage
Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.
Specialization and the gains from trade make the economy PPF outward bowed because _______.
a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs
How does economic growth change the patterns of production? In a low-income country, _________. As a country invests in capital and uses more advanced technologies _______.
agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks
The marginal benefit of a good or service is the _____.
benefit received from consuming one more unit of it
Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.
benefit from; cost of a pencil
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot;less
Economic growth comes from _______.
capital accumulation and technological advance
Why do people specialize and trade? With specialization and trade, people can _______
consume at a point outside their PPF
Marginal benefit ______.
describes preferences
Economic growth ______ overcome scarcity because ______.
does not; we can produce more goods and services but it is still impossible to satisfy all our wants
Capital accumulation is the _____, including _____ capital.
growth of capital resources; human
As a country experiences economic growth, investment in capital and advances in technology _________.
increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate
The opportunity cost of economic growth _______.
is fewer consumption goods today
In an hour, Simon can catch 10 pounds of tuna or pick 10 pounds of oranges. In an hour, Fred can catch 10 pounds of tuna or pick 20 pounds of oranges. The opportunity cost of catching a pound of tuna is ______ for Simon than for Fred, and the opportunity cost of picking a pound of oranges is ______ for Simon than for Fred So ______ has a comparative advantage in producing ______.
lower;higher simon;tuna
