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Exam 2: Trade-Offs, Comparative Advantage, and the Market System

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Question 41

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Which of the following is a factor of production?

A) a sofa produced by a furniture manufacturer
B) 20 shares of Microsoft stock
C) the janitor at the local elementary school
D) $500 in cash

E) None of the above
F) A) and B)

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Question 42

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The term "property rights" refers to

A) the physical possession of a house or any other property which the owner legally purchased.
B) the ability to exercise control over one's own resources within the confines of the law.
C) the government's right to appropriate land from wealthy land owners to redistribute to peasants.
D) the right of a business not to have its assets confiscated by the government in the event that the business is accused of committing fraud.

E) B) and C)
F) All of the above

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Question 43

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Figure 2.19 Alt text for Figure 2.19: In figure 2.19, a circular flow diagram. Long description for Figure 2.19: 4 circles arranged in a circle, labelled as follows, clockwise from the top center: Economic Agents M, Market Economic Agents J, and an unmarked circle.The flow of wages and salaries goes from market K to Economic agents M.The flow of labor services goes from Market K to Economic Agents J. -Refer to Figure 2.19.In the circular flow diagram, Economic Agents M represents

Which of the following would shift a nation's production possibilities frontier outward?

A major factor contributing to the slow growth rate of less developed economies is

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

The unattainable points in a production possibilities diagram are

The ________ production points on a production possibility curve are the points along and inside the production possibility frontier.

Which of the following is not a factor of production?

Figure 2.11 Alt text for Figure 2.11: In figure 2.11, a graph compares paper and steel production. Long description for Figure 2.11: The x-axis is labelled, steel in millions of tons and the quantities 14, 16, 19, and 20 are marked.The y-axis is labelled, paper in millions of tons, and the quantities 4, 9, and 11 are marked.Points Y(14, 9) , W(16, 9) , (19, 4) , and an unnamed point (14, 11) are plotted on the graph, and joined to the respective axes using dotted lines.A concave curve is drawn from the y-axis to the x-axis, passing through the unnamed point (14, 11) , and points W(16, 9) , and X(19, 4) .Point Y is between the curve and the axes. -Refer to Figure 2.11.If the economy is currently producing at point X, what is the opportunity cost of moving to point W?

Adam Smith's behavioural assumption about humans was that people

A critical function of the government in facilitating the operation of a market economy is

Table 2.12 Table 2.12 shows the number of labour hours required to produce a cell phone and a cubic metre of lumber in Estonia and Finland. -Refer to Table 2.12.Finland has a comparative advantage in the production of

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Any output combination outside a production possibility frontier is associated with unused or underutilized resources.

What is the difference between product markets and factor markets?

Figure 2.14 Figure 2.14 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods, pineapples and coconuts. Alt text for Figure 2.14: In figure 2.14, 2 graphs show the production possibilities frontiers for Costa Rica and Guatemala. Long description for Figure 2.14: The graph on the left represents Costa Rica.The x-axis is labelled, coconuts, and is marked from 20 to 200 in increments of 20.The y-axis is labelled, pineapples, and is marked from 20 to 200 in increments of 20.A slanted line is drawn from point 100 on the y-axis to point 150 on the x-axis.The graph on the right represents Guatemala.The x-axis is labelled, coconuts, and is marked from 20 to 200 in increments of 20.The y-axis is labelled, pineapples, and is marked from 20 to 200 in increments of 20.A slanted line is drawn from point 90 on the y-axis to point 180 on the x-axis. -Refer to Figure 2.14.What is the opportunity cost of producing 1 tonne of pineapples in Guatemala?

Table 2.5 Table 2.5 shows the output per week of two jewelers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.5.Which of the following statements is true?

To increase fuel efficiency, automobile manufacturers make cars small and light.Large cars absorb more of the impact of an accident than small cars but yield lower fuel efficiency.These facts suggest that a negative relationship exists between safety and fuel efficiency.

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.