HW #1

production possibilities frontiers are usually bowed outward. this is because

resources are specialized; that is, some are better at producing particular goods rather than other goods

The overriding reason why households and societies face many decisions is that

resources are scarce

Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is

1.6 bushels of squash

labor hours needed to make 1 unit of: England: 2 cheese; 3 bread Spain: 3 cheese, 6 bread number of units produced in 24 hours: England: 12 cheese; 8 bread Spain: 8 cheese, 4 bread Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is,

10 units of cheese, 6 units of bread

Chile's opportunity cost of one pound of coffee is

3/4 pound of soybeans and Columbia's opportunity cost of one pound of coffee is 1/2 pound of soybeans

what is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn

Suppose the U.S. and Japan can both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. Also suppose the U.S. has an absolute advantage in the production of both airplanes and televisions. The U.S. should

export airplanes to Japan and import televisions from Japan

machine minutes needed to make 1 Zimbabwe: 3 for toothbrushes; 10 for hairbrushes Portugal: 5 for toothbrushes; 6 for hairbrushes Portugal has an absolute advantage in the production of

hairbrushes and a comparative advantage in the production of hairbrushes

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

has an absolute advantage in the production of that good

For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to

have a comparative advantage in both activities

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

inefficient production is represented by which point(s)?

point T

One way to characterize the difference between positive statements and normative statements is as follows:

positive statements offer description of the way things are, whereas normative statements offer opinions on how things ought to be

Jamaica has a comparative advantage in the production of Output produced in one day: Jamaica: 12 coolers; 6 radios Norway: 24 coolers; 3 radios

radios and Norway has a comparative advantage in the production of coolers

number of units produced in an hour England: 10 of milk; 4 of oats Holland: 8 of milk; 6 of oats We could use this information in the table to draw a production possibilities frontier for England and a second PPF for Holland. If we were to do this, measuring milk along the horizontal axis, then

the slope of England's PPF would be -4/10 and the slope of Holland's PPF would be -3/4

When an economy is operating inside its production possibilities frontier, we know that

there are unused resources or inefficiencies in the economy

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.