ECON 2110 - Clemson Exam 1 | Actual
study set | Questions and verified study
solutions
Absolute Advantage - ANSW-The ability to produce a good using fewer inputs than another producer.
Comparative Advantage - ANSW-The ability to produce a good at a lower opportunity cost than another
producer.
Possible - ANSW-It is ( possible/impossible ) for a country to have an absolute advantage in both goods.
Impossible - ANSW-It is ( possible/impossible ) for a country to have a comparative advantage in both
goods.
The inverse of the first good - ANSW-If you have the opportunity cost of one good, how can you find the
opportunity cost of the other?
Trade Off - ANSW-The idea of having to sacrifice something for something else because of limits.
Comparative Advantage - ANSW-In order to have a higher overall production, a country should specialize
in the good that it has a(n) (absolute/comparative) advantage in.
Trade - ANSW-What makes everyone better off?
Production Possibilities Curve/Frontier - ANSW-shows maximum amount of any two products that can be
produced from a fixed set of resources, and the possible trade-offs in production between them.
Private Property Rights - ANSW-1. The right to exclusive use
2. Legal Protection
3. The right to transfer, sell, exchange, or mortgage.
Creative Destruction - ANSW-through entrepreneurial discovery and innovation, new products and
methods of production are continuously replacing old one.
Point A, B, and C: Possible and Efficient
Point D: Possible but Inefficient
Point E: Not Possible (unless technology gets better) - ANSW-Points A, B, and C are considered:
Point D is considered:
Point E is considered:
Opportunity Cost - ANSW-What must be given up to obtain a different item.
The slope of the PPF - ANSW-From the PPF, how can you find the opportunity cost of one good?
1. Obtaining additional resources.
2. Improvement in technology - ANSW-What two ways can shift the PPF outward?
When the opportunity cost of a good rises as more of the good is produced. - ANSW-What can cause the
PPF to be bow shaped?
Microeconomics - ANSW-The study of how households and firms make decisions and how they interact
in markets.
Macroeconomics - ANSW-The study of economy-wide phenomena, including inflation, unemployment,
and economic growth.
study set | Questions and verified study
solutions
Absolute Advantage - ANSW-The ability to produce a good using fewer inputs than another producer.
Comparative Advantage - ANSW-The ability to produce a good at a lower opportunity cost than another
producer.
Possible - ANSW-It is ( possible/impossible ) for a country to have an absolute advantage in both goods.
Impossible - ANSW-It is ( possible/impossible ) for a country to have a comparative advantage in both
goods.
The inverse of the first good - ANSW-If you have the opportunity cost of one good, how can you find the
opportunity cost of the other?
Trade Off - ANSW-The idea of having to sacrifice something for something else because of limits.
Comparative Advantage - ANSW-In order to have a higher overall production, a country should specialize
in the good that it has a(n) (absolute/comparative) advantage in.
Trade - ANSW-What makes everyone better off?
Production Possibilities Curve/Frontier - ANSW-shows maximum amount of any two products that can be
produced from a fixed set of resources, and the possible trade-offs in production between them.
Private Property Rights - ANSW-1. The right to exclusive use
2. Legal Protection
3. The right to transfer, sell, exchange, or mortgage.
Creative Destruction - ANSW-through entrepreneurial discovery and innovation, new products and
methods of production are continuously replacing old one.
Point A, B, and C: Possible and Efficient
Point D: Possible but Inefficient
Point E: Not Possible (unless technology gets better) - ANSW-Points A, B, and C are considered:
Point D is considered:
Point E is considered:
Opportunity Cost - ANSW-What must be given up to obtain a different item.
The slope of the PPF - ANSW-From the PPF, how can you find the opportunity cost of one good?
1. Obtaining additional resources.
2. Improvement in technology - ANSW-What two ways can shift the PPF outward?
When the opportunity cost of a good rises as more of the good is produced. - ANSW-What can cause the
PPF to be bow shaped?
Microeconomics - ANSW-The study of how households and firms make decisions and how they interact
in markets.
Macroeconomics - ANSW-The study of economy-wide phenomena, including inflation, unemployment,
and economic growth.
