ECON 131 HW 2

Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

0 washers

Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is

20 dryers

Refer to Table 2-4 (find the table in the homework pdf posted in Laulima > Resources). What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

225 burgers

Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750?

450 hotdogs

Refer to Figure 2-5. It is possible for this economy to produce

60 dryers and 50 washers

Refer to Figure 2-5 (find the figure in the homework pdf posted in Laulima > Resources). If this economy devotes all of its resources to the production of dryers, then it will produce

80 dryers and 0 washers

Refer to Figure 2-5. Efficient production is represented by which point(s)?

A, B (dot is on the curve line thing)

Refer to Figure 2-5. It is not possible for this economy to produce at point

C. (shit is outside the curve line thing)

Refer to Figure 2-5. Inefficient production is represented by which point(s)?

D (in the area below curve line thing)

The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, what events could explain the change?

Gerance experienced a reduction in unemployment. Gerance experienced an improvement in car-making technology. Gerance acquired more resources.

Which of the following is an example of a positive, as opposed to normative, statement?

Prices rise when the government prints too much money.

What is a true statement about the circular flow diagram?

The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.

Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

There is widespread unemployment in the economy.

What is an example of a normative, as opposed to positive, statement?

Universal health care would be good for U.S. citizens.

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

amount of the other good that must be given up.

What concept cannot be illustrated by the production possibilities frontier?

equality

In the simple circular-flow diagram, the participants in the economy are

households and firms

In the markets for the factors of production in the circular-flow diagram,

households are sellers and firms are buyers.

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good

increases as more of the good is produced.

Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

it does not have the resources and technology to produce that level of output.

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

land, labor, and capital

Which markets are represented in the simple circular-flow diagram?

markets for goods and services and markets for factors of production

In the circular-flow diagram, what is not a factor of production?

money

Production is efficient if the economy is producing at a point

on the production possibilities frontier.

The production possibilities frontier provides an illustration of the principle that

people face trade offs

Unemployment would cause an economy to

produce inside its production possibilities frontier.

In the circular-flow diagram, what does not flow from households to firms?

profit

Almost all economists agree that tariffs and import quotas

reduces general economic welfare

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

the available production technology

The two loops in the circular-flow diagram represent

the flows of inputs and outputs and the flow of dollars.

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

the nation is not using all available resources or is using inferior technology or both.

A production possibilities frontier can shift outward if

there is a technological improvement.

If an economy is producing efficiently, then

there is no way to produce more of one good without producing less of another good.

In the circular-flow diagram, what flows from firms to households through the markets for the factors of production?

wages, rent, and profit