Microeconomics Ch.2

A focus on a particular activity or area of study

Specialization _____
+Increases total production, using more workers but the same technology
+Increases total production, using the same number of workers and the Same technology
+Increases total production, using the same number of workers but Better technology
+Decreases total production, using the same number of workers and the same technology

The two main factors that drive the change in U.S. production possibilities are [2 Answers]
+Changes in technology
+International trade
+The number of workers
+Availability of raw materials

A problem with _____ in production is that each producer may end up with only one good.

Positive changes in comparative advantage often
+Change absolute advantage
+Result in economic growth
+Result in economic decline
+Cause wars

Points that lie on production possibilities frontier are called _______
(Efficient/Inefficient)

When opportunity costs are increasing, the production possibilities frontier is:
+A bowed-in curve
+A horizontal line
+An upward-sloping line
+A concave curve

_________ _________ ________ is the improvement in outcomes that occurs when production specialize and exchange goods and services.

There is room for trade as long as the two countries
+Differ in their opportunity costs to produce a good and they set a trading price that is equal to the higher opportunity cost
+Differ in their opportunity costs to produce a good and they set a trading price that falls between those opportunity costs
+Have similar opportunity costs in the production of a good and they set a trading price that falls between those opportunity costs
+Differ in their opportunity costs to produce a good and they set a trading price that is equal to the lower opportunity cost
+Have similar opportunity costs in the production of a good and they set a trading price that is equal to the lowest opportunity cost

A country has a(n) _____ advantage over another country if it can make a product at a lower opportunity cost than another country

When specialized producers exchange goods and services, outcomes improve because of
+The profit motive
+Fewer resources are used
+Lower profits
+Gains from trade

Points inside the production possibilities frontier are ___ (efficient/inefficient) because they don't use all available resources

Points inside the production possibilities frontier are
+Achievable but don't make full use of all available resources
+Achievable and make full use of all available resources
+Not achievable and don't make full use of all available resources
+Not achievable but could make use of all available resources

When a country specializes in the production of a particular good in order to have all the goods they want to consume they must ____ with other countries

Identify a TRUE statement about efficient production
+They are indicated by points within the frontier
+They squeeze the most output from all available resources
+They don't use all available resources
+They use the maximum amount of resources available to produce the output

If a country can produce more of a good or service it has a(n) ____ advantage. If the country can produce a good or service at lower opportunity cost, it has a(n) ____ advantage

The ____ cost of one good is the amount of the other good that must be given up to produce it

A producer has a comparative advantage when they can produce
+More of all goods than another producer
+A good at a lower opportunity cost
+More of a good than another producer
+Less of a good than another producer

The production possibilities frontier shows all the possible combinations of outputs that can be produced using
+All available outputs
+Future technology
+More resources
+All available resources

Trade can be driven by self-interest because
+Everyone gets just what they want independent of the other
+Each producer has an absolute advantage
+People are always self-interested and seek to maximize the others' self interest too
+Everyone gets more of the things they want than they would if they were self-sufficient

When producers specialize in making a particular good according to their comparative advantage, total production possibilities
+Will be the same as if each produced the combination of goods they themselves want to produce
+Are the same as if each produced the combination of goods they themselves want to consume
+Are greater than if each produced the combination of goods they themselves want to consume
+Are smaller than if each produced the combination of goods they themselves want to consume

The 18th century thinker, _____ _____ suggested the term "invisible hand" ro describe a coordinating economic mechanism

If each country focuses on producing the good for which it has a comparative advantage, the total production _____

Based on the assumption of efficiency, we can predict that an economy will choose to produce at a point
+On the frontier rather than inside it
+Either inside or outside the frontier
+Inside the frontier rather than on it
+Either inside or on the frontier

When an economy appears to be guided by an invisible hand, ____
+There is no gov and prices are very low
+No gov intervention is required to coordinated production
+Gov intervention is required to correct market inefficiency
+There are no laws and prices are very high

If a producer can generate more output than others with a given amount of resources, that producer has a(n) ___ advantage

With trade, everyone gets more of the things they want than they would if they were self-sufficient. In this way, trade can be driven entirely by ____-interest

Who is credited with first using the term "Invisible Hand" to describe this coordinating mechanism?
+Adam Smith
+Ronald Reagan
+George Washington
+George Bush

If each country focuses on producing the good for which it has a comparative advantage the country would
+Eliminate all competition
+Also have an absolute advantage
+Specialize in production of that good
+Make large profits

Assume that all workers can't produce the same amount of each good. The opportunity cost of producing one good in terms of the other
+Increases as more of a good is produced bc skills vary among workers
+Is constant as more of a good is produced bc skills are very similar among workers
+Decreases as more of a good is produced bc skills vary among workers

Free competition and full information are assumptions related to the suctioning of the _____ hand of economics

Without trade points that lie outside the production possibilities frontier are
+A poor choice
+Inefficient
+Efficient
+Unattainable

Geographical shifts in the production of clothing has occurred in large part because of ____
+Relatively greater supply of raw materials
+Greater availability of labor
+Lower demand for finished goods
+Lower relative costs of production

The Production possibilities frontier shows:
+All the possible combinations of two inputs that can be used to produce outputs
+The most likely combinations of two imputes that can be produced with ideal resources
+All the possible combinations of outputs that can be produced using all available resources
+All the possible combinations of inputs that can be produced using limited resources

The production possibilities frontier gives us a way to represent the ___ on production

The first question economists use to break down problems - "What are the wants and constraints of those involved?" - can be answered using the
+Production possibilities frontier
+Input and output frontier
+Goods and possibilities frontier
+Production output frontier

The production possibilities frontier helps us answer economists' second question "What are the trade-offs?" because
+There is inefficiency along the production possibilities frontier
+There is no trade-off between the production of the two goods
+There is a trade-off between the production of the two goods
+There is efficiency along the production possibilities frontier

Along a straight line production possibilities curve, the slope of the line measures the ___ cost of one good in terms of the other

A problem with ___ in production is that each producer may end up with only one good

Suppose country A can produce 50 shirts or 200 Bushels of wheat; Country B can produce 25 shirts or 50 Bushels of wheat. The opportunity cost of making a shirt for country B is
+2 bushels of wheat
+1/2 bushels of wheat
+1/4 bushels of wheat
+4 bushels of wheat

Assume there are 4 mil total workers and that each worker takes one day to make a shirt or half a day to grow a bushel of wheat. The number of workers making shirts =X and number growing wheat = 1/2 of Y. We can write this eq form as X+1/2Y=4Mil
The numerical value of the slope of the production possibilities frontier is ____

When the working population decreases the production possibilities frontier
+Shifts outward
+Shifts inward
+Becomes steeper
+Becomes flatter

When opportunity costs are increasing the slope of the production possibilities frontier becomes
+Steeper as you move along the PPF
+Flatter as you move along the PPF
+Positive as you move along the PPF
+Zero as you move along the PPF

How does the production possibilities frontier helps us answer economists' second question "What are the trade-offs?"
+Along the PPF, in order to get more of one thing, you must give up another thing
+Points inside the PPF are currently unattainable given current resources and technology
+Along the PPF, in order to get more than one thing, you don't have to give up anything else
+Points along the PPF are currently unattainable given current resources and technology

Each producer's opportunity cost depends on its
+Absolute ability to produce different goods
+Competitor's ability to produce goods
+Competitor's opportunity cost
+Relative ability to produce different goods

When technology improves the production of one good, the Production possibilities frontier
+Shifts left
+Shifts right
+Pivots outward
+Pivots inward

When the working population Increases the PPF ___ but when technology improves the production of one good the frontier ____
+Shifts left, Pivots outward
+Shifts left, Pivots inward
+Shifts right, Pivots outward
+Shifts right, Pivots inward

Suppose country A can produce 50 shirts or 200 bushels of wheat; country B can produce 25 shirts or 50 bushels of wheat. The opportunity cost of growing a bushel of wheat for country A is
+2 shirts
+1/4 of a shirt
+4 shirts
+1/2 of a shirt

When opportunity costs are constant, the slope of the PPF
+Increases at a Decreasing rate
+Is also constant
+Decreases at an Increasing rate
+Increases at an Increasing rate

TRUE OR FALSE
No producer has a comparative advantage at everything and each producer has a comparative advantage at something