Question 1

If you and I agree to exchange four ginger snaps for one chocolate chip cookie, then it must be true that

Accepted Answer

The answer of If you and I agree to exchange...

Question 2

It is possible for one person to have a comparative advantage in the production of all products?

Accepted Answer

It is highly unlikely for one person or country to have a comparative advantage in the production of all products due to differences in resources, technology, and specialization. Comparative advantage is based on the idea that different entities have different resources, abilities, and costs, and can therefore produce certain goods or services at a lower opportunity cost than others.

Question 3

Suppose you have purchased a non-refundable plane ticket and, at the last moment, you cannot take the trip. You can, however, sell the ticket. If you paid $700 for the ticket, the cost of sending the ticket to someone through overnight mail is $20, and you spend $10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket?

Accepted Answer

The answer of Suppose you have purchased a non-refundable plane...

Question 4

Comparative advantage is based on opportunity costs.

Accepted Answer

Comparative advantage is based on the principle that a country or individual should specialize in producing and exporting goods or services for which they have a lower opportunity cost, compared to others. Opportunity cost is the cost of forgoing the next best alternative when making a choice. Therefore, comparative advantage is based on opportunity costs.

Question 5

If you enjoy playing golf, the opportunity cost of cleaning your room

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The answer of If you enjoy playing golf, the opportunity...

Question 6

Which economic concept does the expression "time is money" reflect?

Accepted Answer

The expression "time is money" reflects the concept of opportunity cost, which refers to the idea that when we choose to spend our time on one activity, we are giving up the opportunity to earn money or experience benefits from other activities. This highlights the importance of making efficient use of our time and resources.

Question 7

The law of comparative advantage states that the person who should produce a good is the person who

Accepted Answer

The law of comparative advantage states that the person who should produce a good is the person who has the lowest opportunity cost of producing that good. This means that they give up the least amount of other goods in order to produce a given good, compared to other potential producers. It is not based on who can produce the good using the fewest resources, who will produce the good using the most expensive resources, who has the most desire for the good, or who has produced the good in the past.

Question 8

The law of comparative advantage says that

Accepted Answer

The law of comparative advantage states that the individual with the lowest opportunity cost of producing a particular good should produce it. This means that even if one person is more efficient at producing both goods, it is more beneficial for each person to specialize in producing the good for which they have a lower opportunity cost, and then trade with others for the other good.

Question 9

The term opportunity cost suggests that

Accepted Answer

The term opportunity cost refers to the fact that because goods are scarce, in order to obtain one good, you must give up some other good in return. This means that there is a cost to every decision, as you are always giving up the next best alternative. Therefore, the best choice is E.

Question 10

The opportunity cost of a particular activity

Accepted Answer

The answer of The opportunity cost of a particular activity
...

Question 11

Sunk costs

Accepted Answer

The answer of Sunk costs
...

Question 12

The opportunity cost of an activity is best measured

Accepted Answer

The opportunity cost of an activity is the value of the next best alternative that is forgone. This means that when making a decision, one must consider what must be given up in order to choose a certain option. Therefore, the best measure of opportunity cost is the value expected from the best alternative that is forgone.

Question 13

A test was scheduled for Monday morning, but you went to a party on Saturday night. If you hadn't attended the party, you could have studied for the test or gone to a movie. Which of the following is true?

Accepted Answer

The answer of A test was scheduled for Monday morning,...

Question 14

Melissa is a self-employed lawyer who chooses a higher-priced restaurant 2 miles from home over a cheaper restaurant 15 miles from home. Which of the following is the most likely explanation for her behavior?

Accepted Answer

The answer of Melissa is a self-employed lawyer who chooses...

Question 15

A university should not disband its football team if it has already paid for the stadium.

Accepted Answer

The answer of A university should not disband its football...

Question 16

If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods.

Accepted Answer

This is the essence of the principle of comparative advantage, as first outlined by David Ricardo. By trading with each other based on their respective comparative advantages, countries can increase their output and overall wealth.

Question 17

Which economic concept does the expression "there's no such thing as a free lunch" reflect?

Accepted Answer

The expression "there's no such thing as a free lunch" reflects the concept of opportunity cost, which means that every decision involves choosing between alternatives, and there is always a cost (in terms of the forgone opportunity) associated with any choice. The expression reminds us that even if something appears to be free, there is always an opportunity cost associated with it.

Question 18

Comparative advantage is

Accepted Answer

Comparative advantage refers to an individual's ability to produce a good at a lower opportunity cost than another individual. In other words, it means that one person can produce a good with fewer resources than another person can, and therefore it is more efficient for the first person to specialize in producing that good.

Question 19

The law of comparative advantage says that a person should produce a good if she

Accepted Answer

The law of comparative advantage states that a person should produce a good if they have the lowest opportunity cost of producing that good. This means that they give up less of another good or activity to produce the good than someone else would. It is not based on desire or absolute advantage, but rather on the relative opportunity cost.

Question 20

Opportunity cost is objective; therefore, its value does not change as circumstances change.

Accepted Answer

Opportunity cost is subjective and can change as circumstances change. The value of what must be given up to obtain something else depends on individual preferences, available resources, and the alternatives that are forgone.

Quiz 2: Economic Tools and Economics Systems