2. Production Possibilities Frontier A) Define (in your own words, please do not use the book, or other online resources) and give a strong, unique, example for the following terms. Answers will be checked for originality. Allocative vs Productive efficiency: comparative vs. absolute advantage: invisible hand: marginal analysis: opportunity cost: positive & normative statements: production possibilities frontier: productive efficiency:

2. Production Possibilities Frontier A) Define (in your own words, please do not use the book, or other online resources) and give a strong, unique, example for the following terms. Answers will be checked for originality. Allocative vs Productive efficiency: comparative vs. absolute advantage: invisible hand: marginal analysis: opportunity cost: positive & normative statements: production possibilities frontier: productive efficiency:

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 6QR

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Similar questions

What is comparative advantage?
What is absolute advantage? What is comparative advantage?
Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.
Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain.
What does a production possibilities frontier illustrate?
Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
How does comparative advantage lead to gains from trade?