Econ ch 2 example #40775

4 December 2022
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question
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‚Äč 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‚Äč 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‚Äč C?
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20 sudans
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Which of the following events would create economic‚Äč growth, that‚Äč is, shift the production possibilities frontier‚Äč outward?
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all of the above
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What is absolute‚Äč 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‚Äč 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‚Äč 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‚Äč 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‚Äč 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‚Äč country, production beyond the production possibilities frontier
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not physically possible
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With respect to‚Äč consumption, individuals and countries
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can, through‚Äč trade, consume beyond their production possibilities frontiers
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During the 1928 presidential election‚Äč campaign, Herbert‚Äč Hoover, the Republican‚Äč 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‚Äč 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‚Äč 2016, the estimated average weekly hours of housework for women declined to‚Äč 15.7, while the hours worked by men increased to about 9.7long dasha total of 25.4 hours of housework. ‚ÄčSource: U.S. Bureau of Labor‚Äč Statistics, "American Time Uselong dash‚Äč2016," June‚Äč 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‚Äč homes?
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‚ÄčNo, because there are more labor saving devices so less time is required.
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Absolute advantage is the ability of an‚Äč individual, a‚Äč 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‚Äč 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‚Äč trade?
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comparative advantage
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How can a country gain from specialization and‚Äč 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‚Äč 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‚Äč produced?
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households
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What is a free‚Äč 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‚Äč economy? Unlike a free market‚Äč 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‚Äč self-interest?
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financial reward
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The British historian Thomas Macaulay once remarked that copyrights are‚Äč "a tax on‚Äč readers." Copyrights are a‚Äč '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‚Äč 'tax' on‚Äč 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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‚ÄčA(n) --- is someone who operates a‚Äč business, bringing together the factors of productionlong dash‚Äčlabor, ‚Äčcapital, and natural resourceslong dashto produce goods and services.
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Entrepreneur
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In economic‚Äč 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 ‚Äč property, including the right to buy or sell it.
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In a free‚Äč 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