Econ 101 Umich Exam 2 Caldwell Questions and Answers
100% Pass GRADED A++
comparative advantage
Ans; when one producer can produce a good at a lower opportunity cost than another producer
-reason for specialization
absolute advantage
Ans; when one producer can produce more of a good than another producer in a certain period of time
Production Possibility Frontier
Ans; represents the possible combinations of goods that an economy can produce in a certain period of
time
specialization
Ans; requires sufficient ability to produce according to demand (must lies on or within PPF)
transportation costs also must be low enough
must be possible to exchange products and large enough market to consumer
efficiency
ANS; no way to produce more of one good without producing less of another good
opportunity cost
ANS; slope of the PPF- increasing if bowed outward because as more is produced, less suitable resources
are used
economic growth
ANS; growth ability of economy to produce goods and services; an outward shift from the PPF sue to
increases in factors of production and changes in technology
sources of comparative advantage
1. difference in climate
2. difference in factor endowments
3. difference in skill level of workers
4. difference in technology
domestic demand and supply curve
1|Page
100% Pass GRADED A++
comparative advantage
Ans; when one producer can produce a good at a lower opportunity cost than another producer
-reason for specialization
absolute advantage
Ans; when one producer can produce more of a good than another producer in a certain period of time
Production Possibility Frontier
Ans; represents the possible combinations of goods that an economy can produce in a certain period of
time
specialization
Ans; requires sufficient ability to produce according to demand (must lies on or within PPF)
transportation costs also must be low enough
must be possible to exchange products and large enough market to consumer
efficiency
ANS; no way to produce more of one good without producing less of another good
opportunity cost
ANS; slope of the PPF- increasing if bowed outward because as more is produced, less suitable resources
are used
economic growth
ANS; growth ability of economy to produce goods and services; an outward shift from the PPF sue to
increases in factors of production and changes in technology
sources of comparative advantage
1. difference in climate
2. difference in factor endowments
3. difference in skill level of workers
4. difference in technology
domestic demand and supply curve
1|Page
