Econ 1202 Chapter 2 Homework Study
Guide Exam and All Correct Answers.
The effect of an increase in productive inputs such as labor and capital can be shown by a(n):
-inward shift of the production possibility frontier.
-outward shift of the production possibility frontier.
-movement from one point to another along the production possibility frontier.
-point inside of the production possibility frontier. - Answer outward shift of the production
possibility frontier.
Wheat and Aluminum. The United States and Germany can produce both wheat and aluminum.
The table shows the maximum annual output combinations of wheat and aluminum that can be
produced. Based on the table:
-Germany has an absolute advantage in aluminum and a comparative advantage in wheat.
-Germany has a comparative advantage in aluminum and an absolute advantage in aluminum.
-the United States has a comparative advantage in wheat and an absolute advantage in wheat.
-the United States has a comparative advantage in both aluminum and wheat. - Answer -the
United States has a comparative advantage in wheat and an absolute advantage in wheat.
Which statement is a positive economic statement?
-There has been an increase in the rate of inflation.
-Government should be subject to the same rules as all other institutions.
-Women should be paid as much as men are for the same work.
-Government has grown too large and should be reduced. - Answer There has been an
increase in the rate of inflation.
If an economy is producing at a point on its production possibilities frontier, it is:
-efficient in allocation but not necessarily in production.
, Production Possibility Frontier for Tealand. If Tealand is producing 10 million scones and 10
million cups of tea (point A), we know that the economy:
-has found new resources.
-is using its resources inefficiently.
-is fully employing its resources.
-is using its resources efficiently. - Answer is using its resources inefficiently.
Strawberries and Submarines. Suppose the economy is operating at point G. This implies that:
-the economy has unemployment and/or inefficiently allocates resources.
-the economy can move to a point such as C only if it improves its technology.
-the economy lacks the resources to achieve a combination such as C.
-people in this economy don't really like strawberries or submarines. - Answer the economy
has unemployment and/or inefficiently allocates resources.
The importance of an economic model is that it allows us to:
-focus on the effects of only one change at a time.
-build a complex and accurate model of how the economy should work.
-avoid opportunity costs.
-build an accurate mathematical model of every aspect of the economy. - Answer focus on the
effects of only one change at a time.
Because of trade, a country may:
-consume inside its production possibility frontier.
-consume outside its production possibility frontier.
-find its production possibility frontier shifting outward.
-avoid opportunity costs. - Answer consume outside its production possibility frontier.
Guide Exam and All Correct Answers.
The effect of an increase in productive inputs such as labor and capital can be shown by a(n):
-inward shift of the production possibility frontier.
-outward shift of the production possibility frontier.
-movement from one point to another along the production possibility frontier.
-point inside of the production possibility frontier. - Answer outward shift of the production
possibility frontier.
Wheat and Aluminum. The United States and Germany can produce both wheat and aluminum.
The table shows the maximum annual output combinations of wheat and aluminum that can be
produced. Based on the table:
-Germany has an absolute advantage in aluminum and a comparative advantage in wheat.
-Germany has a comparative advantage in aluminum and an absolute advantage in aluminum.
-the United States has a comparative advantage in wheat and an absolute advantage in wheat.
-the United States has a comparative advantage in both aluminum and wheat. - Answer -the
United States has a comparative advantage in wheat and an absolute advantage in wheat.
Which statement is a positive economic statement?
-There has been an increase in the rate of inflation.
-Government should be subject to the same rules as all other institutions.
-Women should be paid as much as men are for the same work.
-Government has grown too large and should be reduced. - Answer There has been an
increase in the rate of inflation.
If an economy is producing at a point on its production possibilities frontier, it is:
-efficient in allocation but not necessarily in production.
, Production Possibility Frontier for Tealand. If Tealand is producing 10 million scones and 10
million cups of tea (point A), we know that the economy:
-has found new resources.
-is using its resources inefficiently.
-is fully employing its resources.
-is using its resources efficiently. - Answer is using its resources inefficiently.
Strawberries and Submarines. Suppose the economy is operating at point G. This implies that:
-the economy has unemployment and/or inefficiently allocates resources.
-the economy can move to a point such as C only if it improves its technology.
-the economy lacks the resources to achieve a combination such as C.
-people in this economy don't really like strawberries or submarines. - Answer the economy
has unemployment and/or inefficiently allocates resources.
The importance of an economic model is that it allows us to:
-focus on the effects of only one change at a time.
-build a complex and accurate model of how the economy should work.
-avoid opportunity costs.
-build an accurate mathematical model of every aspect of the economy. - Answer focus on the
effects of only one change at a time.
Because of trade, a country may:
-consume inside its production possibility frontier.
-consume outside its production possibility frontier.
-find its production possibility frontier shifting outward.
-avoid opportunity costs. - Answer consume outside its production possibility frontier.
