Econ ch 2 example #40775

4 December 2022
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What do economists mean by scarcity?
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when unlimited wants exceed limited resources
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Which of the following is not scarce according to the economic​ definition?
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none of the above
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What happens if a country produces a combination of goods that efficiently uses all of the resources available in the​ economy?
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The country is operating on its production possibilities frontier.
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Refer to the graph to the right. What is the opportunity cost of moving from point B to point​ C?
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20 sudans
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Which of the following events would create economic​ growth, that​ is, shift the production possibilities frontier​ outward?
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all of the above
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What is absolute​ advantage?
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The ability to produce more of a good or service than competitors using the same amount of resources.
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What is comparative​ advantage?
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the ability to produce a good or service at a lower opportunity cost than other producers
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Is it possible for a country to have a comparative advantage in producing a good without also having an absolute​ advantage? A country without an absolute advantage in producing a good
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will have a comparative advantage if it has a lower opportunity cost of producing that good.
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Who has the comparative advantage in producing​ oil?
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Neither country has a comparative advantage producing oil because their opportunity costs of producing oil are equal.
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Can these two countries gain from trading oil and fish​ oil?
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These countries cannot gain from trade because neither has a comparative advantage producing either good.
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Whether carried out by an individual or a​ country, production beyond the production possibilities frontier
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not physically possible
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With respect to​ consumption, individuals and countries
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can, through​ trade, consume beyond their production possibilities frontiers
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During the 1928 presidential election​ campaign, Herbert​ Hoover, the Republican​ candidate, argued that the United States should only import those products that could not be produced here. Do you believe that this would be a good​ policy? Explain.
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This is not a good policy because it does not necessarily result in countries producing those goods for which they have a comparative advantage.
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The chapter mentions that in 1965 married women with children worked an average of 32 hours per week while men worked an average of only 4 hours on houseworklong dasha total of 36 hours of housework. In​ 2016, the estimated average weekly hours of housework for women declined to​ 15.7, while the hours worked by men increased to about 9.7long dasha total of 25.4 hours of housework. ​Source: U.S. Bureau of Labor​ Statistics, "American Time Uselong dash​2016," June​ 27, 2017. Does the decrease in the total number of hours of houseworklong dashfrom 36 to 25.4long dashmean that families are willing to live in messier​ homes?
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​No, because there are more labor saving devices so less time is required.
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Absolute advantage is the ability of an​ individual, a​ firm, or a country to
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produce a good or service at a lower opportunity cost than other producers.pr
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If a country has a comparative advantage in the production of a​ good, then that country
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has a lower opportunity cost in the production of that good.
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What is the basis for​ trade?
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comparative advantage
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How can a country gain from specialization and​ trade?
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Specialize in comparative advantage trade for other goods and services
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What are the two main categories of participants in​ markets?
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Firms and households.
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Which participants are of greatest importance in determining what goods and services are​ produced?
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households
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What is a free​ market?
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A free market is one where the government does not control the production of goods and services.
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In what ways does a free market economy differ from a centrally planned​ economy? Unlike a free market​ economy,
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centrally planned economies have extensive government controls.
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What incentives does a market system provide to encourage​ self-interest?
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financial reward
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The British historian Thomas Macaulay once remarked that copyrights are​ "a tax on​ readers." Copyrights are a​ 'tax' on readers in the sense that
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copyrights limit of the supply of related creative work which results in higher prices.
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If copyrights are a​ 'tax' on​ readers, governments provide a legal framework to enforce them because
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copyrights provide needed protection for authors and creators of movies or other artistic works.
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​A(n) --- is someone who operates a​ business, bringing together the factors of productionlong dash​labor, ​capital, and natural resourceslong dashto produce goods and services.
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Entrepreneur
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In economic​ terminology, the inputs used to produce output are referred to as
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factors of production
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The Scottish philosopher Adam Smith argued in 1776 that
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prices would do a better job of coordinating the activities of buyers and sellers than guilds could.
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Property rights are
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the rights individuals or firms have to the exclusive use of theirth ​ property, including the right to buy or sell it.
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In a free​ market, the actions people take are largely determined by
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the motivation of financial reward.th
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The government seeks to protect intellectual property rights by granting
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patents and copyrights