# Macroeconomics with Connect Plus

## Quiz 2 :The Production Possibilities Model, Trade, and Globalization

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When all people use economic reasoning, inefficiency is impossible because if the benefit of reducing that inefficiency were greater than the cost, the inefficiency would be eliminated. Thus, if people use economic reasoning, it's impossible to be on the interior of a production possibility curve. Is this statement true or false? Why?
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The production possibility curve shows all the possible sets of maximum production of two goods when inputs are limited and allocated between them. Comparative advantage is ability of being better in production of one good in comparison to others.
The interior of a production possibility curve represents an area where the production of good is done below the potential i.e. the input resources are underutilized. Therefore, if resources are utilized efficiently and with reasoning then the production point will lie on the circumference of the production possibility curve. But, to say that if everyone use reasoning then it would be impossible to produce below production possibility curve is wrong because there are other factors as well which affect productivity like legal, social and political issues, uncertainties and accidents, etc.

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Show how a production possibility curve would shift if a society became more productive in the output of both widgets and wadgets.
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The production possibility curve shows all the possible sets of maximum production of two goods when inputs are limited and allocated between them. As per the principal of increasing marginal opportunity cost, when production of a good increases then the opportunity cost also increases with every additional unit produced.
It is given that there are two goods produced in the economy i.e. widgets and wadgets. Now the production of widgets as well as wadgets increases because of increased productivity. Show in the graph below, the shifting of the production possibility curve as per the given conditions, as follows: The production possibility curve above represent the shifting of production possibility curve to its right because of increase in overall productivity of the economy i.e. same level of inputs will produce now more outputs.

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Writing in 1776, Adam Smith was concerned not only with the profound effects of the division of laboron productivity (as your textbook notes) but also its stultifying effect on the human capacity. In The Wealth of Nations, Smith warned that performing a few simple operations over and over again could render any worker, no matter his or her native intelligence, "stupid and ignorant." a.Does the division of labor in today's economy continue to have both these effects? b.What are the policy implications? (Radical)
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All the resources are scarce and have limited availability. Economics is study of allocation of resources and it also tries to answer the three basic questions of what to produce, how to produce and for whom the product is produced.a.Most of the jobs today as well are routine jobs where the person keeps on doing same work for days after days. But there are two opposite opinion regarding this approach, one says that it decreases productivity and makes workers smart, while the other opinion which is more popular today, says that repetition of work makes individuals specialized in that job which make them specialized in production and increases productivity and also increases skill and knowledge in that part of process.
b.The policies today are made to secure jobs of individuals which would help people retain their jobs and there is no rule about rotation of jobs so it can be said that even policy also supports the specialization of work today in comparison to job rotation.

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Calculate the slope of lines a through e in the following coordinate system.
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Lawns produce no crops but occupy moreland (25 million acres) in the United States than any single crop, such as corn. This means that the United States is operating inefficiently and hence is at a point inside the production possibility curve. Right? If not, what does it mean?
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It has been said that "capitalism robs us of our sexuality and sells it back to us." a.Does sex sell? b.Is sex used to sell goods from Land Rovers to tissue paper? c.Who, if anyone, is exploited in the use of sex to sell commodities? d.Are both men and women exploited in the same ways? (Feminist)
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Thorstein Veblen, one economist to whom this book is dedicated, wrote that vested interests are those seeking "something for nothing." In this chapter, you learned how technological bias shapes the economy's production possibilities over time so that a country becomes increasingly good at producing a subset of goods.. a.In what ways have vested interests used their influence to bias the U.S. economy toward the production of military goods at the expense of consumer goods? b.What are the short-termand and
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Why might government be less capable than the market to da good?(Austrain)
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A country has the following production possibility table: a.Draw the country's production possibility curve. b.What's happening to marginal opportunity costs as output of food increases? c.Say the country gets better at the production of food.What will happen to the production possibility curve? d.Say the country gets equally better at producing both food and clothing.What will happen to the production possibility curve?
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The test makes ita.Is maximizing output the goal of society? b.If the country is a Christian country,should it be? c.If not, what should it be?(Religious)
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Given the following nonlinear curve, answer the following questions: a.At what point(s) is the slope negative? b.At what point(s) is the slope positive? c.At what point(s) is the slope zero? d.What point is the maximum?:What point is the minimum?
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Design a grade production possibility table and curve that embody the principle of increasing marginal opportunity cost.
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Graph the following costs per unit, and answer the questions that follow. a.Is the relationship between cost per unit and output linear or nonlinear! Why: b.In what range in output is the relationship inverse? In what range in output is the relationship direct? c.In what range in output is the slope negative? In what range in output is the slope positive? d.What is the slope between 1 and 2 units?
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Research shows that after-school jobs are highly correlated with decreases in grade point averages. Those who work 1 to 10hours get a 3.0GPA and those who work 21 hours or more have a 2.7GPA. Higher GPAs are, however, highly correlated with higher lifetime earnings. Assume that a person earns $8,000per year for working part-time in college, and that the return to a 0.1 increase in GPA gives one a 10percent increase in one's lifetime earnings with a present value of$80,000. a.What would be the argument for working rather than studying harder? b.Is the assumption that there is a trade-off between working and grades reasonable?
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What would the production possibility curve
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Show how a production possibility curve would shift if a society became more productive in its output of widgets but less productive in its output of wadgets.
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Within a coordinate space, draw a line with a.Zero slope. b.Infinite slope. c.Positive slope. d.Negative slope.
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Create a coordinate space on graph paper and label the following points: a.(0, 5) b.(-5, - 5) c.(2, - 3) d?(-1, l)
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