Micro quiz 3

The negative slope of the production possibilities frontier represents the idea

of​ tradeoffs, that in order to produce more of one​ good, the nation must produce less of another.

The opportunity cost of a good increases as more of it is produced because

resources are not equally productive in all activities

The United States produced approximately​ ________ worth of goods and services in 2011.

​$15 trillion

While moving on the production possibilities​ frontier, if the opportunity cost of producing one good is​ 1/2, the opportunity cost of producing the other good​ (in the same​ range) is

2.

What is gained when people engage in specialization and​ trade?

Specialization and trade allow people to consume outside their individual production possibilities frontiers.

Why is a production possibilities frontier bowed out​ (concave)?

The bowed shape reflects increasing opportunity cost.

If Wendy can produce more of all goods than Tommy in an​ hour, then

Wendy has an absolute advantage in all goods.

When a person has a comparative advantage in producing a good or​ service, the person has

a lower opportunity cost in producing that product than someone else.

Having a comparative advantage means a nation can

benefit from trade.

The United States is one of the richest nations in the​ world,

but it can still benefit from specialization and trade.

When all of the available factors of production are being efficiently​ employed, the

economy is producing at a point on its PPF.