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Principles of Microeconomics Study Set 3
Quiz 2: Model Building and Gains From Trade
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Question 161
Essay
The existing entries in the following table show the maximum quantities of milk shakes or fruit smoothies the college president and dining hall staffer could make during an afternoon shift,given a fixed amount of resources. a.Fill in the remaining part of the table (be sure to label the units)and answer the questions below.
b.Who has a comparative advantage in producing smoothies? c.Who has an absolute advantage in producing milk shakes?
Question 162
Essay
Why might Shaquille O'Neal,a 7'1'' former National Basketball Association (NBA)player,hire professional movers to help him move,even though his size and strength likely make him more proficient (better)at furniture moving than the professionals he may hire?
Question 163
Essay
When it comes to making ceramic plates and cups,Reza has a comparative advantage over Greta.When it comes to making knives,forks,and spoons,Greta has a comparative advantage over Reza.If Reza and Greta plan to engage in trade for mutual gain,does the concept of opportunity cost enable them to determine exactly what trading ratio of place settings to silverware sets they should use? Why or why not?
Question 164
Essay
How can a person who is "better" or more efficient (in that he or she has an absolute advantage in the production of various goods on the PPF)at producing several things be made even better off by specialization and trade?
Question 165
Essay
Why doesn't our society invest more resources into the production of capital goods to enhance the level of growth in our future production possibilities frontier (PPF)?
Question 166
Essay
Explain why,ultimately,the opportunity cost of producing consumer goods instead of capital goods must be defined in terms of consumer goods.
Question 167
Essay
Is it always better to forgo current consumption in order to invest more in capital goods that will provide more growth in society's production possibilities frontier (PPF)and make us better off in the future?
Question 168
Essay
Explain why,in the figure,a country might rather be at point B than at point A.
Question 169
Essay
Even though person A has an absolute advantage over person B both at producing good X and at producing good Y,it can still make sense for persons A and B to engage in trade involving goods X and Y.Explain why this is so.