iVAT Chapter 2

A  There can be productivity gains in one sector.

B  All of the resources will be transferred between the sectors in an economy.  This will effectively leave some resources to remain idle. This can cause productivity declines in the short-term.

C  Countries won’t necessarily produce what they have comparative advantage in.

D  All of the resources might not be able to transferred between the sectors in an economy.  This will effectively leave some resources to remain idle.

E  A financial bubble an occur that causes production to be greater than predicted.

A  a productivity capacity decline in both goods

B  a productive capacity decline in one good

C  gains from trade

D  comparative advantage gains

E  disequilibrium

A  can be due to comparative advantage

B  can occur when all resources are not being utilized

C  can occur when the maximum amount of production possible is taking place

D  can be attainable and efficient

E  can be attainable and complex

A  due to comparative advantage

B  attainable and deficient

C  attainable and inefficient

D  disentangled

E  unattainable

A  a straight line

B  extremely flat

C  relatively flat

D  bowed outward

E  exponential

A  must be bowed inwards

B  an indeterminate shape

C  must be bowed outwards

D  a straight line

E  must be inverted

A  specialization and the division of labor help markets function more effectively

B  opportunity costs are maximized.

C  all resources are equally effective in the production of all goods

D  labor increases efficiency

E  some resources, people, firms, and nations are more efficient at producing certain goods/services than alternative goods/services.

A  resources that are better suited towards glass production are being converted from the iron sector

B  resources that are better suited towards iron production are being converted from the glass sector

C  the production possibilities curve is becoming steeper

D  the economy is violating the law of increasing costs

E  the production possibilities curve shifted inwards

A  comparative complexity

B  diverting opportunity costs

C  decreasing marginal opportunity costs

D  production possibility surpluses

E  increasing opportunity costs

A  where 150 percent of the economy is devoted to producing that good

B  where 90 percent of the economy is devoted to producing that good

C  comparative disadvantage

D  of inefficiency

E  where 100 percent of the economy is devoted to producing that good