ECO 2315: Ch. 2

the points outside the production possibilities frontier
Explanation: known as?The unattainable points in a production possibilities diagram are known as the points of indeterminacy." These are points on the diagram where it is impossible to determine the exact combination of goods and services that can be produced. The reason for this is that there is not enough information given about the production possibilities of the economy."

25 pedicures
Explanation: Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. if she now performs 35 manicures and 70 pedicures, the opportunity cost of performing an additional 15 manicures is that she would have to forgo performing 25 pedicures.

bowed outward
Explanation: A production possibility frontier with a bowed-out shape indicates increasing opportunity costs as more and more of one good is produced. This is because, as more of one good is produced, more resources must be devoted to its production, and less resources are available for the production of other goods. This means that it becomes increasingly difficult to produce additional units of the good, and the opportunity cost of producing additional units of the good rises.

some factors of production are not equally suited to producing both goods and services
Explanation: The bowed out shape of the production possibilities frontier occurs because of the law of diminishing returns. As more and more of a good is produced, the marginal returns from producing that good begin to decrease. This means that it takes more and more resources to produce each additional unit of the good, and thus the opportunity cost of producing the good increases.

shifting outward
Explanation: model is a graphical representation of the different possible combinations of two goods that can be produced when resources are fixed. The production possibilities frontier model is used to illustrate the concept of opportunity cost, which is the cost of one good in terms of another good. The production possibilities frontier model is also used to illustrate the concept of economic growth.

X to Y
Explanation: A movement from a less developed country to a more developed country could occur because of an influx of immigrant labor.

Y to Z
Explanation: A movement from natural fibers to synthetic fibers is the result of advancements in plastic production technology.

3 million tons of steel
Explanation: The opportunity cost of moving to point W is the value of the goods and services that would have been produced at point X if the economy had not moved to point W.

$11,500
Explanation: The opportunity cost of going to college this term is $7,000. This includes the direct costs of tuition, room and board, and books and other educational supplies, as well as the opportunity cost of lost earnings from working full-time.

the ability to produce a good or a service at a lower opportunity cost than any other producer
Explanation: that a country can produce a good or service at a lower opportunity cost than another country.Comparative advantage is a term used in international trade. It refers to the ability of a country to produce a good or service at a lower opportunity cost than another country. The concept of comparative advantage is used to explain why countries trade with each other.Comparative advantage is based on the idea of opportunity cost. Opportunity cost is the cost of something in terms of the next best alternative. For example, if you have an hour to spend and you can either watch a movie or read a book, the opportunity cost of watching a movie is the time you could have spent reading a book.In the context of international trade, the opportunity cost of producing a good or service is the cost of producing that good or service in terms of the next best alternative. For example, if it takes one hour to produce a widget, the opportunity cost of producing a widget is the time that could have been spent producing something else.The concept of comparative advantage is used to explain why countries trade with each other. It is based on the idea that countries can produce goods and services at different opportunity costs. For example, Country A may have a comparative advantage in the production of widgets. This means that it can produce widgets at a lower opportunity cost than Country B. As a result, Country A will export widgets to Country B in exchange for something that Country B produces at a lower opportunity cost than Country A.The concept of comparative advantage is important because it helps to explain why trade is beneficial for both countries. When countries trade, they are able to produce more goods and services than they could if they were not trading. This is because each country can specialize in the production of the goods and services that it can produce at a lower opportunity cost. As a result, both countries are better off.

Switzerland has comparative advantage in watches
Explanation:that a country can produce a good or service at a lower opportunity cost than another country.Comparative advantage is a term used in international trade. It refers to the ability of a country to produce a good or service at a lower opportunity cost than another country. The concept of comparative advantage is used to explain why countries trade with each other.Comparative advantage is based on the idea of opportunity cost. Opportunity cost is the cost of something in terms of the next best alternative. For example, if you have an hour to spend and you can either watch a movie or read a book, the opportunity cost of watching a movie is the time you could have spent reading a book.In the context of international trade, the opportunity cost of producing a good or service is the cost of producing that good or service in terms of the next best alternative. For example, if it takes one hour to produce a widget, the opportunity cost of producing a widget is the time that could have been spent producing something else.The concept of comparative advantage is used to explain why countries trade with each other. It is based on the idea that countries can produce goods and services at different opportunity costs. For example, Country A may have a comparative advantage in the production of widgets. This means that it can produce widgets at a lower opportunity cost than Country B. As a result, Country A will export widgets to Country B in exchange for something that Country B produces at a lower opportunity cost than Country A.The concept of comparative advantage is important because it helps to explain why trade is beneficial for both countries. When countries trade, they are able to produce more goods and services than they could if they were not trading. This is because each country can specialize in the production of the goods and services that it can produce at a lower opportunity cost. As a result, both countries are better off.

Estonia
Explanation: If the two countries specialize and trade, the country with the comparative advantage in lumber should export lumber.

specialize in being a lawyer because the opportunity cost is lower
Explanation: be paid more for his or her services than a lawyer who is just good at operating a word processorIf the best lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should be paid more for his or her services than a lawyer who is just good at operating a word processor. The reason for this is that the best lawyer in town is able to generate more value for his or her clients than the lawyer who is just good at operating a word processor. The best lawyer in town is able to use his or her skills to get better results for his or her clients, which means that the clients are willing to pay more for his or her services.

Lucy has comparative advantage in making wagons and James in making tricycles
Explanation: There is no definitive answer to this question as it depends on interpretation. However, based on the given information, it is most likely that statement A is true. This is because the other two statements imply a cause and effect relationship between the two variables (i.e. increase in unemployment leads to increase in crime rate), which is not directly mentioned in the data given.

Japan
Explanation: There is no definitive answer to this question as it depends on a number of factors, including the relative prices of rice in the two countries, the relative endowments of the two countries (i.e. how much rice each country has), and the transport costs between the two countries. If the price of rice is higher in Country A than in Country B, and the endowments are such that Country A has more rice than Country B, then it would make sense for Country A to export rice to Country B. This would allow each country to specialize in the production of the good in which it has a comparative advantage (i.e. rice in Country A and something else in Country B), and would lead to a more efficient allocation of resources. Transport costs are also an important consideration 鈥?if the cost of shipping rice from Country A to Country B is very high, then it may not be economically viable for Country A to export rice to Country B.

does not trade with other countries
Explanation: is economically self-sufficient.A country is economically self-sufficient when it can produce all the goods and services it needs without relying on imports from other countries.

1 belt; 2.25 swords
Explanation: a. lower tariffsb. a more flexible exchange ratec. higher tariffsd. a less flexible exchange rateThe terms of trade that could possibly benefit both countries are lower tariffs, a more flexible exchange rate, and higher tariffs. A less flexible exchange rate would not benefit both countries.

10
Explanation: If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, Morocco will gain 105 swords, which is 35 more swords than if there was no trade.

total consumption of goods is greater
Explanation: there is at least one good or service that the country can produce at a lower opportunity cost than the other country. This means that each country can specialize in producing the good or service that it has a comparative advantage in and then trade with the other country for the good or service that it has a comparative disadvantage in. As a result, each country can consume more of both goods and services than it could before trade.An example of comparative advantage would be if one country can produce a good at a lower opportunity cost than another country. In this case, the first country would have a comparative advantage in producing that good. The second country would have a comparative advantage in producing something else. If the two countries traded, each would be better off than if they had not traded.Another example of comparative advantage would be if one country can produce a good at a lower absolute cost than another country. In this case, the first country would have a comparative advantage in producing that good. The second country would have a comparative advantage in producing something else. If the two countries traded, each would be better off than if they had not traded.

some countries have more resources than other countries
Explanation: In the real world, there are many factors that affect trade and specialization. For example, countries may not have the technology or resources to produce the goods they have a comparative advantage in. Additionally, countries may have trade barriers, such as tariffs, that make it difficult to trade goods. Additionally, countries may not want to specialize in a particular good if it is not strategic for their economy.