Question 1

If individuals A and B can both produce only goods X and Y and A does not have a comparative advantage in the production of either X or Y,then we know

Accepted Answer

If A does not have a comparative advantage in the production of either X or Y, then it implies that A's opportunity cost of producing one good in terms of the other good is the same as B's opportunity cost. This means that A and B have the same opportunity costs for X and for Y. Therefore, B does not have a comparative advantage in the production of both X and Y (option C) and the gains from trade will be large in both directions (option D) as both parties can benefit from specializing in the production of the good with lower opportunity cost and then trading for the other good. Option A and E are also incorrect as we cannot make assumptions about absolute advantage or lower opportunity costs of production without additional information.

Question 2

Markets
I.enable buyers and sellers to get information
II.are defined by economists as geographical locations where trade occurs.
III.have evolved because they facilitate trade.
Which of the above statements are correct?

Accepted Answer

Statement I is true as markets provide information to buyers and sellers about the availability and prices of goods and services. Statement II is incorrect as economists define markets as the intersection of supply and demand for a given product or service, irrespective of location. Statement III is correct as markets have evolved to facilitate trade and exchange of goods and services between buyers and sellers. Therefore, options A and D are incorrect. Option B is incorrect as it only considers one aspect of markets (their evolution) without acknowledging their role in facilitating trade through the provision of information. Hence, the correct answer is C.

Question 3

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1.Each country will gain from trade if

Accepted Answer

By specializing, each country can produce at a level beyond their production possibility frontier (PPF), which would allow them to trade and consume more of both goods. This is best achieved if Vulcan specializes in producing good X, while Romulus specializes in producing good Y. This would allow them to trade between themselves and consume more of both goods, thereby mutually benefiting.

Question 4

Consider the following household.In 5 hours,Bob can cook 5 meals or clean 6 rooms.In 5 hours,Mary can cook 30 meals or clean 10 rooms.Select the best statement.

Accepted Answer

Mary has a higher opportunity cost for cleaning rooms than cooking meals, so she should specialize in cooking where she has a comparative advantage.

Question 5

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Accepted Answer

The answer of In Portugal,the opportunity cost of a bale...

Question 6

Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
 
-Given the information in Table 2.4.2,can Sheila and Bruce gain by specialization?

Accepted Answer

By comparing the opportunity costs (the amount of one good that must be given up to produce one more unit of another good) of Sheila and Bruce, we can see that Sheila has a comparative advantage in producing oranges (it only takes her 2 apples to produce 1 orange, whereas it takes Bruce 5 apples to produce 1 orange) and Bruce has a comparative advantage in producing apples (it only takes him 1/5 of an orange to produce 1 apple, whereas it takes Sheila 1/2 of an orange to produce 1 apple). By specializing in the goods in which they have a comparative advantage, they can both produce more of both goods, increasing the total production and potentially benefiting from trade. Therefore, the correct answer is E.

Question 7

Mexico and Canada produce both oil and apples using labour only.A barrel of oil is produced with 4 hours of labour in Mexico and 8 hours of labour in Canada.A bushel of apples is produced with 8 hours of labour in Mexico and 12 hours of labour in Canada.Canada has

Accepted Answer

The answer of Mexico and Canada produce both oil and...

Question 8

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.Both individuals gain if ________.

Accepted Answer

The answer of Tom takes 20 minutes to cook an...

Question 9

To gain from comparative advantage,countries must not only trade,they must also

Accepted Answer

The answer of To gain from comparative advantage,countries must not...

Question 10

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1.For Vulcan,the opportunity cost of producing an additional unit of Y is

Accepted Answer

The opportunity cost of producing an additional unit of Y is the amount of X given up. For Vulcan, producing an additional unit of Y requires giving up 1/2 unit of X (moving from point A to point B or from point C to point D). Therefore, the answer is B.

Question 11

There are two goods,X and Y.If the opportunity cost of producing good X is lower for Pam than for Gino,then

Accepted Answer

The answer of There are two goods,X and Y.If the...

Question 12

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1.For Romulus,the opportunity cost of producing an additional unit of Y is

Accepted Answer

The answer of Use the figure below to answer the...

Question 13

Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
 
-Suppose John and Joe each have different production possibility frontiers;John specializes in cloth and Joe specializes in corn.John's island unexpectedly has exceptionally good weather,and suddenly he is twice as productive in the production of both corn and cloth.Select the best statement.

Accepted Answer

The answer of Use the table below to answer the...

Question 14

Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
 
-Given the information in Table 2.4.2,which one of the following is true?

Accepted Answer

According to the table, Bruce has a lower opportunity cost of producing good X compared to Sheila (0.4 units of Y vs. 0.5 units of Y). Therefore, Bruce should specialize in producing good X. Additionally, the opportunity cost to Bruce of producing an additional unit of X is 0.4 units of Y (as he would have to give up producing 0.4 units of Y to produce one more unit of X), which is option C. Therefore, the correct answer is E, B and C. Option A is incorrect because Sheila has a higher opportunity cost of producing good X, so she should specialize in producing good Y.

Question 15

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.If Tom and Jerry specialize and trade eggs and sandwiches with each other ________.

Accepted Answer

Tom takes a total of 25 minutes to complete both tasks (20 minutes for cooking an egg and 5 minutes for making a sandwich).

Jerry takes a total of 18 minutes to complete both tasks (15 minutes for cooking an egg and 3 minutes for making a sandwich).

If Tom focuses only on cooking eggs and Jerry focuses only on making sandwiches, then Tom can cook 3 eggs in 60 minutes and Jerry can make 20 sandwiches in 60 minutes.

If they trade, Tom can cook an egg in 20 minutes and then spend 5 minutes making a sandwich, for a total of 25 minutes.

Jerry can make a sandwich in 3 minutes and then spend 15 minutes cooking an egg, for a total of 18 minutes.

Therefore, by specializing and trading, both Tom and Jerry can complete both tasks in less time than if they did both tasks individually. Therefore, both of them benefit.

Question 16

It pays for people to specialize and trade with each other because

Accepted Answer

Specialization and trade allow individuals or countries to consume beyond their own production possibilities frontier by focusing on producing goods where they have a comparative advantage and trading for other goods.

Question 17

Trade is organized using the social institutions of

Accepted Answer

Trade is organized using all of these social institutions: firms, property rights, money, and markets. Each plays a crucial role in facilitating and structuring trade.

Question 18

In one hour,Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets.Sue's opportunity cost of producing a cap is ________ jackets and Tessa's opportunity cost of producing a cap is ________ jackets.
________ has a comparative advantage in producing caps.
If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps,________.

Accepted Answer

The answer of In one hour,Sue can produce 50 caps...

Question 19

A property right is

Accepted Answer

A property right is a social arrangement that governs the ownership, use, and disposal of anything that people value. This includes tangible objects such as land, buildings, and personal possessions, as well as intangible objects such as intellectual property and contractual rights. Property rights are crucial in promoting economic efficiency and encouraging investment and innovation, as they provide individuals and businesses with the assurance that they will reap the benefits of their efforts and investments.

Question 20

The flows in the market economy that go from firms to households are ________.
The flows in the market economy that go from households to firms are ________.

Accepted Answer

In a market economy, the flows from firms to households consist of the real flows of goods and services and the income flows of wages, rent, interest, and profits. Conversely, the flows from households to firms include the real flows of labor, land, capital, and entrepreneurship and the flow of expenditure on goods and services. This reflects the circular flow of economic activity where households provide factors of production to firms and spend their income on goods and services produced by firms, while firms pay households for the use of factors of production and supply goods and services to households.

Quiz 2: The Economic Problem

If individuals A and B can both produce only goods X and Y and A does not have a comparative advantage in the production of either X or Y,then we know

Markets I.enable buyers and sellers to get information II.are defined by economists as geographical locations where trade occurs. III.have evolved because they facilitate trade. Which of the above statements are correct?

Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Each country will gain from trade if

Consider the following household.In 5 hours,Bob can cook 5 meals or clean 6 rooms.In 5 hours,Mary can cook 30 meals or clean 10 rooms.Select the best statement.

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce -Given the information in Table 2.4.2,can Sheila and Bruce gain by specialization?

Mexico and Canada produce both oil and apples using labour only.A barrel of oil is produced with 4 hours of labour in Mexico and 8 hours of labour in Canada.A bushel of apples is produced with 8 hours of labour in Mexico and 12 hours of labour in Canada.Canada has

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.Both individuals gain if ________.

To gain from comparative advantage,countries must not only trade,they must also

There are two goods,X and Y.If the opportunity cost of producing good X is lower for Pam than for Gino,then

Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce -Given the information in Table 2.4.2,which one of the following is true?

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.If Tom and Jerry specialize and trade eggs and sandwiches with each other ________.

It pays for people to specialize and trade with each other because

Trade is organized using the social institutions of

A property right is

The flows in the market economy that go from firms to households are . The flows in the market economy that go from households to firms are .

Quiz 2: The Economic Problem

If individuals A and B can both produce only goods X and Y and A does not have a comparative advantage in the production of either X or Y,then we know

Markets I.enable buyers and sellers to get information II.are defined by economists as geographical locations where trade occurs. III.have evolved because they facilitate trade. Which of the above statements are correct?

Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Each country will gain from trade if

Consider the following household.In 5 hours,Bob can cook 5 meals or clean 6 rooms.In 5 hours,Mary can cook 30 meals or clean 10 rooms.Select the best statement.

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce -Given the information in Table 2.4.2,can Sheila and Bruce gain by specialization?

Mexico and Canada produce both oil and apples using labour only.A barrel of oil is produced with 4 hours of labour in Mexico and 8 hours of labour in Canada.A bushel of apples is produced with 8 hours of labour in Mexico and 12 hours of labour in Canada.Canada has

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.Both individuals gain if ________.

To gain from comparative advantage,countries must not only trade,they must also

There are two goods,X and Y.If the opportunity cost of producing good X is lower for Pam than for Gino,then

Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce -Given the information in Table 2.4.2,which one of the following is true?

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich.Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich.If Tom and Jerry specialize and trade eggs and sandwiches with each other ________.

It pays for people to specialize and trade with each other because

Trade is organized using the social institutions of

A property right is

The flows in the market economy that go from firms to households are ________. The flows in the market economy that go from households to firms are ________.

The flows in the market economy that go from firms to households are . The flows in the market economy that go from households to firms are .