Econ 101 Umich Exam 2 Caldwell Test
Questions with Correct Answers.
comparative advantage - Answer when one producer can produce a good at a lower
opportunity cost than another producer
-reason for specialization
absolute advantage - Answer when one producer can produce more of a good than another
producer in a certain period of time
Production Possibility Frontier - Answer represents the possible combinations of goods that
an economy can produce in a certain period of time
specilaization - Answer requires sufficient ability to produce according to demand (must lies
on or within PPF)
transportation costs also must be low enough
must be possible to exchange products and large enough market to consumer
efficiency - Answer no way to produce more of one good without producing less of another
good
opportunity cost - Answer slope of the PPF- increasing if bowed outward because as more is
produced, less suitable resources are used
economic growth - Answer growth ability of economy to produce goods and services; an
outward shift from the PPF sue to increases in factors of production and changes in technology
sources of comparative advantage - Answer 1. difference in climate
2. difference in factor endowments
3. difference in skill level of workers
4. difference in technology
domestic demand and supply curve - Answer normal curves with name for when within
country
world price - Answer price at which the good can be bough or sold abroad
Questions with Correct Answers.
comparative advantage - Answer when one producer can produce a good at a lower
opportunity cost than another producer
-reason for specialization
absolute advantage - Answer when one producer can produce more of a good than another
producer in a certain period of time
Production Possibility Frontier - Answer represents the possible combinations of goods that
an economy can produce in a certain period of time
specilaization - Answer requires sufficient ability to produce according to demand (must lies
on or within PPF)
transportation costs also must be low enough
must be possible to exchange products and large enough market to consumer
efficiency - Answer no way to produce more of one good without producing less of another
good
opportunity cost - Answer slope of the PPF- increasing if bowed outward because as more is
produced, less suitable resources are used
economic growth - Answer growth ability of economy to produce goods and services; an
outward shift from the PPF sue to increases in factors of production and changes in technology
sources of comparative advantage - Answer 1. difference in climate
2. difference in factor endowments
3. difference in skill level of workers
4. difference in technology
domestic demand and supply curve - Answer normal curves with name for when within
country
world price - Answer price at which the good can be bough or sold abroad
