Chapter 2 econ

The table above shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.What is China's opportunity cost of producing one pound of wheat?

0.04 units of a digital camera

one cell phone. lumber estonia 40 hrs 8hrs finland 16 hrs 4hrs What is Estonia's opportunity cost of producing one board foot of lumber?

0.2 cell phones

According to Adam Smith, which of the following is necessary for the proper functioning of the market system?

For markets to work, people must be free to pursue their self-interest.

Which of the following statements is most consistent with positive economic analysis? The United States would be better off being self-sufficient, so it wouldn't need to rely on other nations for certain goods. The United States should establish trade with friendly countries and avoid trade with its enemies. The United States benefits if it specialized in the production of some goods, and then trads some of them to other countries. The United States should produce at home the goods that it now imports—that way the nation can generate additional jobs here at home.

The United States benefits if it specialized in the production of some goods, and then trads some of them to other countries.

Which of the following statements is most consistent with positive economic analysis?

The United States benefits if it specializes in the production of some goods, and then trades some of them to other countries.

What happens if a country produces a combination of goods that uses all of the resources available in the economy? All of the other answers are correct. The country is maximizing its opportunity cost. The country is operating on its production possibilities frontier. The country has eliminated scarcity.

The country is operating on its production possibilities frontier.

Crude oil is not an example of a factor of production, but when crude oil is processed into gasoline, it is a factor of production.

false

If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.

false

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

false

On a diagram of a production possibility frontier, the opportunity cost of the good on the vertical axis is represented by the slope of the production possibility frontier.

false

If a country has a comparative advantage in the production of a good, then that country

has a lower opportunity cost in the production of that good.

Entrepreneurs bring together the factors of production to produce goods and services.

true

The basis for trade is comparative advantage, not absolute advantage.

true

To increase gas mileage, automobile manufacturers make cars small and light. Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage. These facts suggest that a negative relationship exists between safety and gas mileage.

true

food. clothing country a 6 3 country b. 1. 2 Consider the table above. What is country A s opportunity cost of producing 1 unit of clothing? 6 units of food 2 units of clothing 2 units of food 1/2 a unit of food

2 units of food

The figure above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. What is the opportunity cost of one pound of meat?

4/3 pounds of vegetables

The opportunity cost of taking an on-line history class is A) equal to the highest value of an alternative use of the time and money spent on the class. B) zero because there is no classroom time involved if you are enrolled in the course. C) the cost of tuition and fees only.the knowledge and enjoyment you receive from taking the class D) .the value of the time spent on line.

A) equal to the highest value of an alternative use of the time and money spent on the class.

If the price of a good or service rises, households have to choose whether to buy less of that good or service or spend less on other goods and services. Studies have shown that when the price of health care rises, A) people cut back on their spending of medical services. B) people consume more medical services because these services are viewed as being more valuable, and they significantly reduce spending on other goods and services. C) people continue to consume the same amount of medical services and reduce spending on other goods and services, because medical services are viewed as a necessity. D) there is no correlation between the rising prices of medical services and the quantity of these services consumed.

A) people cut back on their spending of medical services.

A student comments to his roommate that the only way he will be able to pass his final exams is to not sleep for the next three days. This statement suggests that A) students are not concerned much about good health. B) there is a trade-off between studying and sleep. C) society should value sleep more highly than good grades. D) society should value good grades more highly than sleep because students can catch up on their sleep once final exams are over.

B) there is a trade-off between studying and sleep.

food. clothing country a. 6 3 country b 1 2 Which country has a comparative advantage in the production of each good?

Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing.

food. clothing country a. 6 3 country b 1 2 Which country has an absolute advantage in the production of each good? Both countries have an absolute advantage in the production of each good. Country B has an absolute advantage in the production of each good. Country A has an absolute advantage in the production of each good. Neither country has an absolute advantage in the production of each good.

Country A has an absolute advantage in the production of each good.

george jack lawns mowed. 10 6 cultivated. 5. 4 The table above shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Which of the following statements is true? Jack has an absolute advantage in lawn mowing and George in garden cultivating. George has an comparative advantage in lawn mowing Jack has an absolute advantage in garden cultivating and George in lawn mowing George has an absolute advantage in both tasks.

George has an comparative advantage in lawn mowing

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. Which of the following statements is true?

Haley has an absolute advantage in making bracelets and Serena in making necklaces.

According to Adam Smith, which of the following is true? Individuals usually act in a rational, self-interested way. Market prices can come to reflect the prices desired by all consumers. All of the other answers are correct Markets work because producers, aided by government, ensure that neither too many nor too few goods are produced.

Individuals usually act in a rational, self-interested way.

The figure above shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. If these two countries decide to specialize and trade then

Pakistan will specialize in and export cashews

If property rights are not well enforced, all of the following are likely to occur except an economy will produce inside its production possibilities frontier. a significant number of people will be willing to risk their funds by investing them in local businesses. economic efficiency will be reduced. fewer goods and services will be produced.

a significant number of people will be willing to risk their funds by investing them in local businesses.

If a market system functions well, which of the following is necessary for the enforcement of contracts and property rights?

an independent court system

Which of the following would shift a nation's production possibilities frontier outward? an increase in demand for the nation's products discovering a cheap way to convert sunshine into electricity a law requiring workers to retire at age 50 a decrease in the unemployment rate

discovering a cheap way to convert sunshine into electricity

The primary purpose of patents and copyrights is to

encourage the expenditure of funds on research and development to create new products

In a free market system, which of the following groups brings together the factors of production—labor, capital, and natural resources—in order to produce goods and services? lobbyists politicians entrepreneurs the government

entrepreneurs

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.

Which of the following comprises the two key groups of participants in the circular flow of income?

households and firms

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. bowed out linear bowed in non-linear

linear

What is the name given to the highest-valued alternative that must be given up to engage in any activity? opportunity cost the production possibilities frontier scarcity a trade-off

opportunity cost

The table above presents the production choices for Tomaso's Trattoria. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear. at the horizontal intercept of Tomaso's production possibilities frontier. inside Tomaso's production possibilities frontier. along Tomaso's production possibilities frontier. outside Tomaso's production possibilities frontier.

outside Tomaso's production possibilities frontier.

Absolute advantage is the ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources. produce more goods without giving up much consume more goods or services than others at lower costs. produce a good or service at a lower opportunity cost than other producers.

produce more of a good or service than competitors using the same amount of resources.

Which of the following refers to markets where goods such as computers or services such as medical treatment are offered? essential markets factor markets product markets competitive markets

product markets

What are patents and copyrights designed to do?

protect intellectual property rights

Economic growth is represented on a production possibilities frontier model by the production possibility frontier

shifting outward.

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the __________ the payoff to devoting additional resources to that activity. proportional smaller more instant greater

smaller

A production possibilities frontier will be linear instead of bowed out if the opportunity cost of producing more of either of the two goods is zero. resources are employed efficiently. the opportunity cost of producing either of the two goods always increases. the opportunity cost of producing more of either of the two goods is constant.

the opportunity cost of producing more of either of the two goods is constant.

The attainable production points on a production possibility curve are the points outside the area enclosed by the production possibilities frontier. the points along and inside the production possibility frontier. the points along the production possibilities frontier. the horizontal and vertical intercepts.

the points along and inside the production possibility frontier.

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. the laws of nature that influence economics decisions. property ownership laws and the rule of the court system. the government's unobtrusive role in ensuring that the economy functions efficiently.

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

The figure above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables.The linear production possibilities frontier in the figure indicates that

the tradeoff between meat and vegetables is constant.