ECON 2110 - Clemson - Exam 1 Questions and Answers Graded A+

ECON 2110 - Clemson - Exam 1 Questions and Answers Graded A+ Absolute Advantage - Answers The ability to produce a good using fewer inputs than another producer. Comparative Advantage - Answers The ability to produce a good at a lower opportunity cost than another producer. True or False: It is impossible for a country to have an absolute advantage in both goods. - Answers False. True or False: It is impossible for a country to have a comparative advantage in both goods. - Answers True. If you have the opportunity cost of one good, how can you find the opportunity cost of the other? - Answers The inverse of the first good. Trade Off - Answers The idea of having to sacrificing something for something else because of limits. In order to have a higher overall production, a country should specialize in the good that it has a(n) (absolute/comparative) advantage in. - Answers Comparative Advantage. What makes everyone better off? - Answers Trade Production Possibility Frontier - Answers A graph that shows the combination of two goods the economy can possibly produce given the available technology. Point A, B, and C: Possible and Efficient Point D: Possible but Inefficient Point E: Not Possible (unless technology gets better) - Answers Points A, B, and C are considered: Point D is considered: Point E is considered: Opportunity Cost - Answers What must be given up to obtain a different item. From the PPF, how can you find the opportunity cost of one good? - Answers The slope of the PPF What two ways can shift the PPF outward? - Answers 1. Obtaining additional resources. 2. Improvement in technology. What can cause the PPF to be bow-shaped? - Answers When the opportunity cost of a good