Macro Homework 2

Point A is ___ and point B is ___

Attainable, unattainable

The production possibilities frontier is the boundary between the combination 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

You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?

You have a comparative advantage in picking apples.

Ms. Boulware is the best lawyer and the best secretary in town. She has:

an absolute advantage in both jobs

In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?

division of labor

In the circular flow model, who supplies factors of production in exchange for income?

households

Allocative efficiency occurs when

we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal costs

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

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 the circular model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

Goods Markets

As an economy experiences economic growth, shares of production shift:

Initially from agriculture to industry and then from industry to services

Absolute advantage is the ability of an individual, firm, country to

Produce more of a good service than competitors using the same amount of resources

What are copyrights designed to accomplish?

Protect intellectual property rights

The principle of increasing opportunity cost states that the more resources devoted to any activity,

The mallet the payoff to devoting additional resources to that activity

Which of the following is critical to the success of the market system?

To allow individuals or firms to have exclusive use of their property

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

opportunity cost