Question 1

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves.To finish both tasks as quickly as possible,Sarah and Zoe know that each of them should focus on just one task,but they don't know who should do what.Sarah and Zoe should determine which roommate:

Accepted Answer

To determine the comparative advantage in cooking, Sarah and Zoe should figure out who has a lower opportunity cost in cooking. This means they should compare how much time each of them takes to cook a certain dish versus how much time it would take them to make a costume. Whichever roommate has the lower opportunity cost in cooking (meaning they can cook in less time than it would take them to make a costume) should focus on cooking while the other focuses on making costumes. Without additional information, it is impossible to determine which roommate has the absolute advantage in cooking or who can cook the most in a given amount of time.

Question 2

An economy is said to have a comparative advantage in the production of one good if it:

Accepted Answer

A comparative advantage exists when an economy can produce a particular good or service at a lower opportunity cost than another economy. This means that they must give up less of another good or service in order to produce the same amount of the particular good. Therefore, the economy with the lowest opportunity cost has a comparative advantage in the production of that good.

Question 3

Use the following to answer question:

-(Table: Coffee and Salmon Production Possibilities)Use Table: Coffee and Salmon Production Possibilities.The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.The opportunity cost of producing 1 unit of coffee for Brazil is _____ salmon.

Accepted Answer

The opportunity cost of producing 1 unit of coffee for Brazil is found by comparing the trade-off between coffee and salmon. If Brazil produces 1 more unit of coffee, it gives up 0.5 units of salmon, based on the production possibilities given in the table.

Question 4

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

Accepted Answer

Comparative advantage is based on the opportunity cost of producing a good. An economy has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost than another economy.

Question 5

Use the following to answer question:

-(Table: Coffee and Salmon Production Possibilities)Use Table: Coffee and Salmon Production Possibilities.The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.The opportunity cost of producing 1 unit of salmon for Alaska is _____ coffee(s).

Accepted Answer

The opportunity cost for producing 1 unit of salmon in Alaska is 2 coffees. However, the question asks for the opportunity cost of producing 1 unit of salmon, which means we need to find the ratio of the two goods. The ratio for Alaska is 4:8, which simplifies to 1:2. Therefore, the opportunity cost of producing 1 unit of salmon for Alaska is 1 coffee. Brazil's opportunity cost for producing 1 unit of salmon is 0.5 coffee. Since Alaska has a lower opportunity cost for salmon production, it has a comparative advantage in salmon production. Therefore, Alaska should specialize in salmon production and trade with Brazil for coffee.

Question 6

Economists generally believe that a country should specialize in the production of a good or service if the:

Accepted Answer

Economists believe that a country should specialize in producing a good or service if it can produce it while forgoing fewer alternative products than any other country. This is because the opportunity cost of producing the good or service is lower for that country, making it more efficient to produce it. The production possibility frontier does not necessarily determine whether a country should specialize because it only shows the maximum possible combinations of two goods that can be produced with the resources available in the economy.

Question 7

Use the following to answer question: 
-(Table: Coffee and Salmon Production Possibilities II)Use Table: Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon,both measured in pounds,that Brazil and Alaska can produce if they just produce one good.Brazil has an absolute advantage in producing:

Accepted Answer

Brazil has a higher maximum production of coffee than Alaska, indicating an absolute advantage in coffee production. However, Alaska has a higher maximum production of salmon than Brazil.

Question 8

In a single day,Sarah can produce 10 hamburgers,and Abe can produce 5 hamburgers.Therefore,_____ has a(n)_____ advantage in making hamburgers.

Accepted Answer

Sarah has an absolute advantage because she can produce more hamburgers in a single day than Abe can.

Question 9

The economy with the LOWEST opportunity cost of producing a particular good is said to have a(n):

Accepted Answer

Comparative advantage is when an economy can produce a good or service at a lower opportunity cost than another economy. This means that the economy has to give up less of another good or service to produce the same amount of the particular good.

Question 10

Use the following to answer question:

-(Table: Fish and Coconut Production Possibilities)Use Table: Fish and Coconut Production Possibilities.The table shows the maximum number of fish and coconuts that Tom and Hank can produce if they produce only one good.In the absence of trade,Tom produces and consumes 9 fish and 2 coconuts,and Hank produces and consumes 3 fish and 2 coconuts.Now they decide to engage in trade.Which statement is INCORRECT?

Accepted Answer

Since Hank is equally productive in both goods, the opportunity cost of producing one unit of fish or one unit of coconut for Hank is the same. Therefore, it doesn't matter which good he specializes in, as he can trade with Tom to get the good he isn't producing. Nonetheless, specialization would still allow for increased production and consumption possibilities for both individuals.

Question 11

Use the following to answer question: 
-(Table: Coffee and Salmon Production Possibilities II)Use Table: Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon,both measured in pounds,that Brazil and Alaska can produce if they just produce one good.Alaska has an absolute advantage in producing:

Accepted Answer

The answer of Use the following to answer question: 
-(Table:...

Question 12

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.Given this information and supposing Laurence and Carrie Anne have constant opportunity costs,we know that _____ has an absolute advantage in _____.

Accepted Answer

Laurence has an absolute advantage in both programs (10 vs. 5) and sunglasses (6 vs. 4).

Question 13

Which statement is TRUE?

Accepted Answer

Comparative advantage exists when a person or country can produce a good or service at a lower opportunity cost than others, even if they are less efficient (have an absolute disadvantage) in producing that good or service overall. This concept allows for trade benefits between parties, each specializing in areas where they hold a comparative advantage.

Question 14

Free trade between countries:

Accepted Answer

Free trade allows countries to specialize in the production of goods where they have a comparative advantage, leading to more efficient resource allocation and higher levels of consumption than would be possible without trade.

Question 15

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that:

Accepted Answer

Laurence's opportunity cost of writing programs is 6/10 = 0.6 pairs of sunglasses per program, while Carrie Anne's is 4/5 = 0.8 pairs per program. Therefore, Laurence's opportunity cost of writing programs is less than Carrie Anne's.

Question 16

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that _____ has a comparative advantage in _____.

Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost in producing a good. Laurence can produce 10 programs or 6 sunglasses, meaning for each program Laurence forgoes 0.6 sunglasses (6 sunglasses / 10 programs). Carrie Anne can produce 5 programs or 4 sunglasses, meaning for each program Carrie Anne forgoes 0.8 sunglasses (4 sunglasses / 5 programs). Since Laurence's opportunity cost of producing programs is lower, Laurence has a comparative advantage in programs. For sunglasses, Laurence forgoes 1.67 programs per pair of sunglasses (10 programs / 6 sunglasses), and Carrie Anne forgoes 1.25 programs per pair of sunglasses (5 programs / 4 sunglasses), making Carrie Anne more efficient in producing sunglasses due to a lower opportunity cost. Thus, Laurence has a comparative advantage in programs.

Question 17

If they produce only hamburgers,in a single day Sarah can produce 10 hamburgers,and Abe can produce 5 hamburgers.If they make milkshakes only,in a single day Sarah can produce 10 milkshakes,and Abe can produce 4 milkshakes.Therefore,_____ has an absolute advantage and a comparative advantage in making _____.

Accepted Answer

The answer of If they produce only hamburgers,in a single...

Question 18

Use the following to answer question: 
-(Table: Coffee and Salmon Production Possibilities II)Use Table: Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon,both measured in pounds,that Brazil and Alaska can produce if they just produce one good.Brazil has a comparative advantage in producing:

Accepted Answer

Brazil has a lower opportunity cost for producing coffee compared to Alaska. In other words, for Brazil to produce one pound of coffee, they only have to give up producing 0.5 pounds of salmon, while Alaska would have to give up producing 1 pound of salmon. Therefore, Brazil has a comparative advantage in producing coffee.

Question 19

An economy that has the LOWEST opportunity cost of producing a particular good is said to have a(n):

Accepted Answer

The concept of comparative advantage states that a country should specialize in producing the good/service in which they have the lowest opportunity cost. Therefore, if an economy has the lowest opportunity cost of producing a particular good, then it has a comparative advantage in producing that good.

Question 20

In one hour,the United States can produce 25 tons of steel or 250 automobiles.In one hour,Japan can produce 30 tons of steel or 275 automobiles.This information implies that:

Accepted Answer

Japan has a comparative advantage in the production of automobiles because it gives up less steel production to produce automobiles compared to the United States. Comparative advantage is determined by the opportunity cost of producing one good over another.

Quiz 2: Economic Models: Trade-Offs and Trade

An economy is said to have a comparative advantage in the production of one good if it:

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

Economists generally believe that a country should specialize in the production of a good or service if the:

In a single day,Sarah can produce 10 hamburgers,and Abe can produce 5 hamburgers.Therefore,_ has a(n) _ advantage in making hamburgers.

The economy with the LOWEST opportunity cost of producing a particular good is said to have a(n) :

Which statement is TRUE?

Free trade between countries:

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that:

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that _ has a comparative advantage in _.

An economy that has the LOWEST opportunity cost of producing a particular good is said to have a(n) :

In one hour,the United States can produce 25 tons of steel or 250 automobiles.In one hour,Japan can produce 30 tons of steel or 275 automobiles.This information implies that:

Quiz 2: Economic Models: Trade-Offs and Trade

An economy is said to have a comparative advantage in the production of one good if it:

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

Economists generally believe that a country should specialize in the production of a good or service if the:

In a single day,Sarah can produce 10 hamburgers,and Abe can produce 5 hamburgers.Therefore,_____ has a(n) _____ advantage in making hamburgers.

The economy with the LOWEST opportunity cost of producing a particular good is said to have a(n) :

Which statement is TRUE?

Free trade between countries:

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that:

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that _____ has a comparative advantage in _____.

An economy that has the LOWEST opportunity cost of producing a particular good is said to have a(n) :

In one hour,the United States can produce 25 tons of steel or 250 automobiles.In one hour,Japan can produce 30 tons of steel or 275 automobiles.This information implies that:

In a single day,Sarah can produce 10 hamburgers,and Abe can produce 5 hamburgers.Therefore,_ has a(n) _ advantage in making hamburgers.

If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that _ has a comparative advantage in _.