(1) Suppose there are two countries, Canada and England. Each country can produce either bacon or muffins.
     The following table shows the number of each good produced per hour. Assume that countries have
     identical laborforces.
 

                    Canada                  200                             200
 (a) Does any country have an absolute advantage in any good(s)? How do you know?
 (b) Does any country have a comparative advantage in any good(s)? How do you know?
 (c) Explain how countries could gain from specialization.

(2) Explain why a production possibilities frontier has a bowed- out shape.

(3) Explain the following terms
  (a) Long run
  (b) Short run
  (c) Fixed costs
  (d) Fixed inputs
   (e) Variable inputs

(4) List the five key principles of economics and provide a brief description for each principle.

(5) Explain briefly the difference between the production possibilities and the production possibility frontier.

(6) Explain which marginal decisions are you implicitly making when determining how much time to study for your economics exam.

(7) When a firm hired its tenth worker, its factory output increased by four units per month. Would you expect the firm's output to increase by eight more units per month if the firm hired two or more workers?