ECN 202 - Chapter 3 Dynamic Study Module

Which of these will increase the quantity of goods and services that can be produced by a worker in one hour of work?

A technological change

In the above graph, which of the following combinations of pies and cakes is unattainable given the existing resources?

Four cakes and seven pies

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.

The outward shift of the production possibilities frontier from point A to point B in the above graph would most likely be caused by

a technological advance that affects both the production of automobiles and aircraft carriers

According to the theory of comparative advantage, specialization and free trade will benefit:

all trading partners who specialize in goods where they have comparative advantage

When nations specialize in their comparative advantage and engage in trade

both may gain by obtaining greater quantities of goods

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

Moving along a PPF that is bowed outward, as more of a good is produced, the opportunity cost of additional units __________.

increases

One opportunity cost of attending college is the __________.

lost wages while going to school

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

When an economy cannot produce more of one good or service without reducing the production of another good or service it is said to be __________.

production efficient

Which of these factors would shift the production possibilities frontier outward?

A more educated labor force.

In the above graph, which of the following combinations is unattainable with the current resources available in this country?

Combination G

Countries gain from specializing in producing goods in which they have a(n) __________ advantage and trading for goods in which other countries have a(n) __________ advantage.

Comparative, comparative

In the previous graph, which country has a comparative advantage in the production of shirts?

Country B

Refer to the previous graph. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing hybrids?

Moving from point B to point C

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

Opportunity cost

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

an absolute advantage in both jobs

When an economy moves from one point to another on the PPF it means the __________.

combination of goods and services produced has changed

If the production possibilities frontier shifts outward, this shift reflects __________.

economic growth

When a student elects to study economics an additional 10 hours per week they are forced to give up 10 hours in leisure or work. This illustrates the concept of __________.

tradeoffs

Using information in the previous table, what is country A's opportunity cost of producing 1 unit of clothing?

2 units of food

All points that plot on the production possibilities frontier represent combinations of goods and services that are __________.

using all available resources and technology