ECON 2110 - CLEMSON: EXAM 1 QUESTIONS WITH
100% CORRECT ANSWERS.
Absolute Advantage Answer - The ability to produce a good using fewer inputs
than another producer.
Comparative Advantage Answer - 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. Answer - False.
True or False: It is impossible for a country to have a comparative advantage in
both goods. Answer - True.
If you have the opportunity cost of one good, how can you find the opportunity
cost of the other? Answer - The inverse of the first good.
Trade Off Answer - 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. Answer -
Comparative Advantage.
What makes everyone better off? Answer - Trade
, Production Possibility Frontier Answer - 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) Answer - Points A, B, and
C are considered:
Point D is considered:
Point E is considered:
Opportunity Cost Answer - What must be given up to obtain a different item.
From the PPF, how can you find the opportunity cost of one good? Answer -
The slope of the PPF
What two ways can shift the PPF outward? Answer - 1. Obtaining additional
resources.
2. Improvement in technology.
What can cause the PPF to be bow-shaped? Answer - When the opportunity
cost of a good rises as more of the good is produced.
Microeconomics Answer - The study of how households and firms make
decisions and how they interact in markets.
Macroeconomics Answer - The study of economy-wide phenomena, including
inflation, unemployment, and economic growth.
100% CORRECT ANSWERS.
Absolute Advantage Answer - The ability to produce a good using fewer inputs
than another producer.
Comparative Advantage Answer - 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. Answer - False.
True or False: It is impossible for a country to have a comparative advantage in
both goods. Answer - True.
If you have the opportunity cost of one good, how can you find the opportunity
cost of the other? Answer - The inverse of the first good.
Trade Off Answer - 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. Answer -
Comparative Advantage.
What makes everyone better off? Answer - Trade
, Production Possibility Frontier Answer - 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) Answer - Points A, B, and
C are considered:
Point D is considered:
Point E is considered:
Opportunity Cost Answer - What must be given up to obtain a different item.
From the PPF, how can you find the opportunity cost of one good? Answer -
The slope of the PPF
What two ways can shift the PPF outward? Answer - 1. Obtaining additional
resources.
2. Improvement in technology.
What can cause the PPF to be bow-shaped? Answer - When the opportunity
cost of a good rises as more of the good is produced.
Microeconomics Answer - The study of how households and firms make
decisions and how they interact in markets.
Macroeconomics Answer - The study of economy-wide phenomena, including
inflation, unemployment, and economic growth.
