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ECON 2110 - Clemson Exam 1 questions and answers
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ECON 2110 - Clemson Exam 1 questions and answers
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ECON 2110 - Clemson: Exam 1questions and answers
Absolute Advantage - answer The ability to produce a good using fewer
inputs than another producer.
Comparative Advantage - answer The ability to produce a good at a lower
opportunity cost than another producer.
Possible - answer It is ( possible/impossible ) for a country to have an
absolute advantage in both goods.
Impossible - answer It is ( possible/impossible ) for a country to have a
comparative advantage in both goods.
The inverse of the first good - answer If you have the opportunity cost of
one good, how can you find the opportunity cost of the other?
Trade Off - answer The idea of having to sacrifice something for something
else because of limits.
Comparative Advantage - answer In order to have a higher overall
production, a country should specialize in the good that it has a(n)
(absolute/comparative) advantage in.
Trade - answer What makes everyone better off?
Production Possibilities Curve/Frontier - answer shows maximum amount
of any two products that can be produced from a fixed set of resources,
and the possible trade-offs in production between them.
Private Property Rights - answer 1. The right to exclusive use
, 2. Legal Protection
3. The right to transfer, sell, exchange, or mortgage.
Creative Destruction - answer through entrepreneurial discovery and
innovation, new products and methods of production are continuously
replacing old one.
Point A, B, and C: Possible and Efficient
Point D: Possible but Inefficient
Point E: Not Possible (unless technology gets better) - answer Points A, B,
and C are considered:
Point D is considered:
Point E is considered:
Opportunity Cost - answer What must be given up to obtain a different
item.
The slope of the PPF - answer From the PPF, how can you find the
opportunity cost of one good?
1. Obtaining additional resources.
2. Improvement in technology - answer What two ways can shift the PPF
outward?
When the opportunity cost of a good rises as more of the good is
produced. - answer What can cause the PPF to be bow shaped?
Microeconomics - answer The study of how households and firms make
decisions and how they interact in markets.
Macroeconomics - answer The study of economy-wide phenomena,
including inflation, unemployment, and economic growth.
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