Alpha Beta Production Possibilities Production Possibilities D B 4 C Product A Product A 3 B 2 D 1 X Y 0 12 Y 4 12 Refer to the above tables. The domestic opportunity cost of one unit of X in Beta is: O 2 units of Y. O 1 unit of Y. O 3 units of Y. 4 units of Y. O 6 units of Y.

What is absolute advantage? What is comparative advantage?

What is comparative advantage?

Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.

Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.

In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?

What is an example of a problem in the world today, not mentioned in the chapter, that has an economic dimension?

In what ways (it) company investments in research and development create positive externalities?

During the Second World War, Germanys factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germanys production possibilities curve?

Suppose we extend the circular flow model to add imports and exports. Copy the circular flow diagram onto a sheet of paper and then add a foreign county as a third agent. Draw a rough sketch of the flows of imports, exports, and the payment for each on your diagram.