Chapter 2 Economics
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
Which of the following is not a factor of production?
$1,000 cash
If Mendonca chooses to produce 160 pounds of vegetables, how much meat can it produce to maximize production?
0 pounds of meat
What is Haley's opportunity cost of making a bracelet?
1 1/3 necklaces
What is Serena's opportunity cost of making a necklace?
1/2 of a bracelet
What is Barney's opportunity cost of making a pogo stick?
1/2 unicycle
What is Serena's opportunity cost of making a bracelet?
2 necklaces
What is Barney's opportunity cost of making a unicycle?
2 pogo sticks
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
Which of the following statements is true?
Barney has a comparative advantage in making unicycles and Fred in making pogo sticks
Which of the following is true?
Barney has an absolute advantage in making both products
Which of the following statements is true?
Haley has 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 no 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 semesterminus−long economics class is
equal to the highest value of an alternative use of the time and money spent on the class.
Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in the figure above represent his production possibilities frontier?
graph A
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 cost
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 to the right. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear
outside of 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 in 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-interesting bring about a market outcome that benefits society as a whole
Without an increase in the supplies of factors of production, how can a nation achieve economic growth?
through technological advancements which enables more output with the same quantity of resources
The points outside the production possibilities frontier are
unattainable
Refer to the diagram to the right. Point C is
unattainable with current resources
If the economy is currently producing at point Y, what is the opportunity cost of moving to point W?
zero