iVAT Chapter 2

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

B  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.

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

D  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.

E  There can be productivity gains in one sector.

A  disequilibrium

B  comparative advantage gains

C  a productivity capacity decline in both goods

D  a productive capacity decline in one good

E  gains from trade

A  can occur when all resources are not being utilized

B  can be attainable and efficient

C  can be attainable and complex

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

E  can be due to comparative advantage

A  unattainable

B  disentangled

C  due to comparative advantage

D  attainable and inefficient

E  attainable and deficient

A  a straight line

B  extremely flat

C  exponential

D  relatively flat

E  bowed outward

A  must be bowed inwards

B  must be bowed outwards

C  an indeterminate shape

D  a straight line

E  must be inverted

A  opportunity costs are maximized.

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

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

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

E  labor increases efficiency

A  the production possibilities curve shifted inwards

B  the production possibilities curve is becoming steeper

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

D  the economy is violating the law of increasing costs

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

A  comparative complexity

B  increasing opportunity costs

C  diverting opportunity costs

D  production possibility surpluses

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

D  of inefficiency

E  comparative disadvantage