Question 1

In most countries today,many goods and services consumed are imported from abroad,and many goods and services produced are exported to foreign customers.

Accepted Answer

This statement is true. Globalization and international trade have led to a significant increase in the import and export of goods and services between countries.

Question 2

Production possibilities frontiers cannot be used to illustrate tradeoffs.

Accepted Answer

Production possibilities frontiers illustrate the tradeoffs that occur when an economy reallocates resources between two goods. It is a graphical representation of the concept of opportunity cost, which demonstrates the quantity of one good that must be given up in order to produce more of the other.

Question 3

Interdependence among individuals and interdependence among nations are both based on the gains from trade.

Accepted Answer

Interdependence among individuals and nations is based on the concept of comparative advantage, which leads to gains from trade. This means that by specializing in the production of certain goods or services, individuals or nations can produce more efficiently and effectively than if they tried to produce everything themselves. As a result, trade allows for a greater overall level of production and consumption, leading to mutual gains and interdependence.

Question 4

Assume a farmer has the ability to produce corn and/or beans.Whenever the farmer spends 1 hour less producing corn and 1 hour more producing beans,he reduces his output of corn by 2 bushels and raises his output of beans by 3 bushels.In view of these assumptions,the farmer's production possibilities frontier is bowed out.

Accepted Answer

The answer of Assume a farmer has the ability to...

Question 5

Opportunity cost measures the trade-off between two goods that each producer faces.

Accepted Answer

Opportunity cost is the cost of choosing one option over another, and it is measured by the value of the next best alternative that must be given up in order to pursue the chosen option. In the context of producers, opportunity cost measures the trade-off between producing one good versus another, as producers must allocate limited resources to produce one good at the expense of producing another good.

Question 6

Trade allows a country to consume outside its production possibilities frontier.

Accepted Answer

With trade, a country can specialize in producing the goods it is relatively more efficient at producing, and import the goods it is relatively less efficient at producing. This allows the country to consume outside its own production possibilities frontier.

Question 7

Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes.Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes.Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.

Accepted Answer

Opportunity cost is defined as the cost of giving up one opportunity in favor of another. In this context, Jake's opportunity cost of writing a poem is the amount of time it would take him to complete an oil change instead. His oil change time is only 45 minutes compared to Ming-la's oil change time of 30 minutes, meaning that Jake has a lower opportunity cost for writing a poem.

Question 8

Opportunity cost refers to how many inputs a producer requires to produce a good.

Accepted Answer

Opportunity cost refers to the value of the next best alternative forgone when a choice is made. It is not directly related to the inputs required to produce a good.

Question 9

It is possible for the U.S.to gain from trade with Germany even if it takes U.S.workers fewer hours to produce every good than it takes German workers.

Accepted Answer

The principle of comparative advantage states that countries should specialize in producing and exporting goods in which they have a lower opportunity cost than other countries. This means that even if one country has an absolute advantage in producing all goods, both countries can still gain from trade by specializing in those goods they can produce more efficiently, and importing those goods that are cheaper to produce in the other country. Thus, the U.S. can benefit from trading with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Question 10

In one month,Moira can knit 2 sweaters or 4 scarves.In one month,Tori can knit 1 sweater or 3 scarves.Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves.

Accepted Answer

Moira's opportunity cost of knitting a scarf is 0.5 sweaters (2 sweaters / 4 scarves), while Tori's is 0.33 sweaters (1 sweater / 3 scarves), making Moira's opportunity cost higher.

Question 11

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

Accepted Answer

The production possibilities frontier only shows the different combinations of production choices that are possible, but it does not determine which choice the producer will make. The actual choice will depend on factors such as demand, cost, and opportunity cost.

Question 12

To produce 100 bushels of wheat,Farmer A requires fewer inputs than does Farmer B.We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Accepted Answer

Absolute advantage refers to the ability of a producer to produce a particular good or service more efficiently than another producer, using fewer resources. In this case, since Farmer A requires fewer inputs to produce the same amount of wheat as Farmer B, Farmer A has an absolute advantage in wheat production.

Question 13

An economy can produce at any point on or inside its production possibilities frontier,but it cannot produce at points outside its production possibilities frontier.

Accepted Answer

This statement is true according to the definition of a production possibilities frontier. Points on or inside the frontier represent combinations of goods that can be produced with the given resources and technology, while points outside the frontier are unattainable with the current level of resources and technology.

Question 14

If a person chooses self-sufficiency,then she can only consume what she produces.

Accepted Answer

Self-sufficiency means relying on oneself for basic needs instead of depending on others. If a person chooses self-sufficiency, they would only consume what they produce through farming, gardening, or other means of production.

Question 15

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Accepted Answer

A production possibilities frontier shows the maximum combination of outputs that an economy can produce given its resources and technology, not what it should produce.

Question 16

Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour.The opportunity cost to Henry of making a bird house is 1/3 bird feeder.

Accepted Answer

The opportunity cost of making a bird house for Henry is 3 bird feeders because he could make 3 bird feeders in the time it takes to make one bird house.

Question 17

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can,then Wrex cannot gain from trading math problems and book reports with Maxine.

Accepted Answer

Even if Wrex is more efficient in both tasks, he can still benefit from trading with Maxine due to the principle of comparative advantage, which allows both parties to specialize in the production of goods for which they have a lower opportunity cost, leading to gains from trade for both.

Question 18

For a country producing two goods,the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Accepted Answer

This is a basic principle of opportunity cost in economics. The opportunity cost of producing one good is the value of the next best alternative that is foregone. Therefore, the opportunity cost of one good is the inverse of the opportunity cost of the other good.

Question 19

An assumption of the production possibilities frontier model is that technology is fixed.

Accepted Answer

The production possibilities frontier model assumes that technology is fixed and does not change over the given time period being analyzed.

Question 20

Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth.Dewey's opportunity cost of producing one bushel of corn is 1/2 yard of cloth.

Accepted Answer

The answer of Suppose that in one hour Dewey can...

Quiz 3: Interdependence and the Gains From Trade