Question 1

Suppose a gardener produces both green beans and corn in her garden.If the opportunity cost of one bushel of corn is 3/5 bushel of green beans,then the opportunity cost of 1 bushel of green beans is
A) 3/5 bushel of corn.
B) 5/3 bushels of corn.
C) 3 bushels of corn.
D) 5 bushels of corn.

Accepted Answer

The answer of Suppose a gardener produces both green beans...

Question 2

Kelly and David are both capable of repairing cars and cooking meals.Which of the following scenarios is not possible?
A) Kelly has a comparative advantage in repairing cars and David has a comparative advantage in cooking meals.
B) Kelly has an absolute advantage in repairing cars and David has an absolute advantage in cooking meals.
C) Kelly has a comparative advantage in repairing cars and in cooking meals.
D) David has an absolute advantage in repairing cars and in cooking meals.

Accepted Answer

According to the scenario, Kelly and David are both capable of repairing cars and cooking meals. This means that there is no absolute advantage for any one of them in either of the tasks. However, it is possible for one of them to have a comparative advantage in one task over the other. Therefore, option A and B are possible. Option D is not possible as it is not feasible for one individual to have an absolute advantage in both tasks. Option C is also not possible as it suggests that Kelly has a comparative advantage in both tasks, which is unlikely.

Question 3

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn,then
A) Iowa has a comparative advantage in the production of corn.
B) Iowa has an absolute advantage in the production of corn.
C) Iowa should import corn from Oklahoma.
D) Oklahoma should produce just enough corn to satisfy its own residents' demands.

Accepted Answer

Comparative advantage is determined by the opportunity cost of producing a good. If Iowa's opportunity cost of producing corn is lower than Oklahoma's, then Iowa has a lower opportunity cost in producing corn and therefore a comparative advantage. They should specialize in producing corn and trade with Oklahoma to both benefit from the trade.

Question 4

If Shawn can produce donuts at a lower opportunity cost than Sue,then
A) Shawn has a comparative advantage in the production of donuts.
B) Sue has a comparative advantage in the production of donuts.
C) Shawn should not produce donuts.
D) Shawn is capable of producing more donuts than Sue in a given amount of time.

Accepted Answer

According to the principle of comparative advantage, if Shawn can produce donuts at a lower opportunity cost than Sue, then he has a comparative advantage in the production of donuts. Therefore, it would be more efficient for Shawn to specialize in the production of donuts and for Sue to specialize in another area where she has a comparative advantage.

Question 5

If Shawn can produce more donuts in one day than Sue can produce in one day,then
A) Shawn has a comparative advantage in the production of donuts.
B) Sue has a comparative advantage in the production of donuts.
C) Shawn has an absolute advantage in the production of donuts.
D) Sue has an absolute advantage in the production of donuts.

Accepted Answer

Shawn producing more donuts in one day than Sue means Shawn has an absolute advantage in the production of donuts, as absolute advantage refers to the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group. Comparative advantage, on the other hand, involves the ability to produce a good at a lower opportunity cost, which is not determined by the information given.

Question 6

Suppose a gardener produces both green beans and corn in her garden.If she must give up 14 bushels of corn to get 5 bushels of green beans,then her opportunity cost of 1 bushel of green beans is
A) 0.36 bushel of corn.
B) 2.8 bushels of corn.
C) 14 bushels of corn.
D) 70 bushels of corn.

Accepted Answer

The opportunity cost of producing green beans is the value of the highest valued alternative that must be forgone in order to produce them. In this case, the gardener must give up 14 bushels of corn to produce 5 bushels of green beans. Therefore, the opportunity cost of producing 1 bushel of green beans is 14/5 bushels of corn, which simplifies to 2.8 bushels of corn.

Question 7

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.
A) Susan has an absolute advantage over Paul in washing windows.
B) Susan has a comparative advantage over Paul in washing windows.
C) Paul has a comparative advantage over Susan in ironing shirts.
D) All of the above are correct.

Accepted Answer

The answer of Suppose Susan can wash three windows per...

Question 8

Comparative advantage is related most closely to which of the following?
A) output per hour
B) opportunity cost
C) efficiency
D) bargaining strength in international trade

Accepted Answer

Comparative advantage is the ability of a country or individual to produce a particular good at a lower opportunity cost than its trading partner. In other words, it is the ability to produce a good at a lower forgone output of another good. Therefore, comparative advantage is related most closely to opportunity cost.

Question 9

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,where Sandy can make 6 tables or 18 chairs.Given this,we know that the opportunity cost of 1 chair is
A) 1/5 table for Mike and 1/3 table for Sandy.
B) 1/5 table for Mike and 3 tables for Sandy.
C) 5 tables for Mike and 1/3 table for Sandy.
D) 5 tables for Mike and 3 tables for Sandy.

Accepted Answer

For Mike, the opportunity cost of 1 chair is the number of tables he could have made instead. Therefore, the opportunity cost of 1 chair for Mike is 1/4 table (since he can make 4 tables or 20 chairs). For Sandy, the opportunity cost of 1 chair is also the number of tables she could have made instead, which is 1/6 table (since she can make 6 tables or 18 chairs). 
Similarly, the opportunity cost of 1 table for Mike is the number of chairs he could have made instead, which is 5 chairs (since he can make 20 chairs or 4 tables). The opportunity cost of 1 table for Sandy is the number of chairs she could have made instead, which is 3 chairs (since she can make 18 chairs or 6 tables).
Therefore, the correct answer is A: 1/5 table for Mike and 1/3 table for Sandy.

Question 10

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,while Sandy can make 6 tables or 18 chairs.Given this,we know that
A) Mike has an absolute advantage in chairs.
B) Mike has a comparative advantage in tables.
C) Sandy has an absolute advantage in chairs.
D) Sandy has a comparative advantage in chairs.

Accepted Answer

The answer of Mike and Sandy are two woodworkers who...

Question 11

Travis can mow a lawn in two hours or he can trim a tree in one hour.Ricardo can mow a lawn in three hours or he can trim a tree in two hours.
A) Travis has an absolute advantage over Ricardo in trimming trees.
B) Travis has a comparative advantage over Ricardo in mowing lawns.
C) Ricardo has a comparative advantage over Travis in trimming trees.
D) All of the above are correct.

Accepted Answer

The answer of Travis can mow a lawn in two...

Question 12

Both Bill and Mary produce t-shirts and hats.If Bill's opportunity cost of 1 t-shirt is 4 hats and Mary's opportunity cost of 1 t-shirt is 3 hats,then
A) Bill has a comparative advantage in the production of t-shirts.
B) Mary has a comparative advantage in the production of t-shirts.
C) Mary has a comparative advantage in the production of hats.
D) Bill has a comparative advantage in the production of both t-shirts and hats.

Accepted Answer

Mary has a lower opportunity cost of producing t-shirts compared to Bill (her opportunity cost is 3 hats while Bill's opportunity cost is 4 hats). This means that Mary has a comparative advantage in the production of t-shirts. Therefore, the correct answer is B.

Question 13

If he devotes all of his available resources to cantaloupe production,a farmer can produce 120 cantaloupes.If he sacrifices 1.5 watermelons for each cantaloupe that he produces,it follows that
A) if he devotes all of his available resources to watermelon production, then he can produce 80 watermelons.
B) he cannot have a comparative advantage over other farmers in producing cantaloupes.
C) his opportunity cost of one watermelon is 2/3 of a cantaloupe.
D) his production possibilities frontier is bowed-out.

Accepted Answer

The opportunity cost of one watermelon is the number of cantaloupes that the farmer must give up in order to produce one watermelon. The farmer sacrifices 1.5 watermelons for each cantaloupe produced, so the opportunity cost of one watermelon is 2/3 of a cantaloupe (since 1/1.5=2/3). Therefore, option C is the correct choice.

Question 14

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,
A) has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
B) has a comparative advantage in the production of that good.
C) has an absolute advantage in the production of that good.
D) should be the only producer of that good.

Accepted Answer

An absolute advantage exists when a producer requires fewer inputs to produce a given amount of a good compared to other producers. This concept focuses on the efficiency in the use of inputs, not on the opportunity cost or the exclusivity of production.

Question 15

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,where Sandy can make 6 tables or 18 chairs.Given this,we know that the opportunity cost of 1 table is
A) 1/5 chair for Mike and 1/3 chair for Sandy.
B) 1/5 chair for Mike and 3 chairs for Sandy.
C) 5 chairs for Mike and 1/3 chair for Sandy.
D) 5 chairs for Mike and 3 chairs for Sandy.

Accepted Answer

The opportunity cost of 1 table for Mike is 5 chairs (20 chairs/4 tables), and for Sandy, it is 3 chairs (18 chairs/6 tables).

Question 16

Absolute advantage is found by comparing different producers'
A) opportunity costs.
B) payments to land, labor, and capital.
C) input requirements per unit of output.
D) locational and logistical circumstances.

Accepted Answer

Absolute advantage is determined by comparing the input requirements per unit of output of different producers. This means that the producer who requires fewer inputs (such as labor, capital, or materials) to produce the same amount of output as another producer is said to have an absolute advantage. Therefore, option C is the best choice as it directly relates to the concept of absolute advantage. The other options, such as opportunity costs, payments to factors of production, and locational/logistical circumstances, are not directly related to the idea of absolute advantage.

Question 17

Canada and the U.S.both produce wheat and computer software.Canada is said to have the comparative advantage in producing wheat if
A) Canada requires fewer resources than the U.S. to produce a bushel of wheat.
B) the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.
C) the opportunity cost of producing a bushel of wheat is lower for the U.S. than it is for Canada.
D) the U.S. has an absolute advantage over Canada in producing computer software.

Accepted Answer

Comparative advantage is determined by comparing the opportunity cost of producing one good with that of producing another. If Canada has a lower opportunity cost of producing wheat than the U.S., it has a comparative advantage in producing wheat. Therefore, choice B is the best answer. The other choices are either unrelated or incorrect.

Question 18

When describing the opportunity cost of two producers,economists use the term
A) natural advantage.
B) trading advantage.
C) comparative advantage.
D) absolute advantage.

Accepted Answer

The term used to describe the opportunity cost of two producers is comparative advantage. This concept refers to the ability of one producer to produce a good or service at a lower opportunity cost than another producer. By specializing in the production of their lower opportunity cost good, both producers can benefit from trade and increase their overall production and consumption. This concept is a key principle in international trade theory and has important implications for economic growth and development. The other choices, natural advantage, trading advantage, and absolute advantage, do not accurately describe the concept of opportunity cost and comparative advantage.

Question 19

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then
A) Tom must have an absolute advantage in the production of baseball bats.
B) Jim must have an absolute advantage in the production of baseball bats.
C) Tom has a comparative advantage in the production of baseball bats.
D) Jim has a comparative advantage in the production of baseball bats.

Accepted Answer

The answer of Suppose Jim and Tom can both produce...

Question 20

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks.Which of the following is not possible?
A) Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks.
B) Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks.
C) Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats.
D) Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

Accepted Answer

The answer of Suppose Jim and Tom can both produce...

Quiz 3: Interdependence and the Gains from Trade.

Suppose a gardener produces both green beans and corn in her garden.If the opportunity cost of one bushel of corn is 3/5 bushel of green beans,then the opportunity cost of 1 bushel of green beans is

Kelly and David are both capable of repairing cars and cooking meals.Which of the following scenarios is not possible?

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn,then

If Shawn can produce donuts at a lower opportunity cost than Sue,then

If Shawn can produce more donuts in one day than Sue can produce in one day,then

Suppose a gardener produces both green beans and corn in her garden.If she must give up 14 bushels of corn to get 5 bushels of green beans,then her opportunity cost of 1 bushel of green beans is

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Comparative advantage is related most closely to which of the following?

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,where Sandy can make 6 tables or 18 chairs.Given this,we know that the opportunity cost of 1 chair is

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,while Sandy can make 6 tables or 18 chairs.Given this,we know that

Travis can mow a lawn in two hours or he can trim a tree in one hour.Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Both Bill and Mary produce t-shirts and hats.If Bill's opportunity cost of 1 t-shirt is 4 hats and Mary's opportunity cost of 1 t-shirt is 3 hats,then

If he devotes all of his available resources to cantaloupe production,a farmer can produce 120 cantaloupes.If he sacrifices 1.5 watermelons for each cantaloupe that he produces,it follows that

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,where Sandy can make 6 tables or 18 chairs.Given this,we know that the opportunity cost of 1 table is

Absolute advantage is found by comparing different producers'

Canada and the U.S.both produce wheat and computer software.Canada is said to have the comparative advantage in producing wheat if

When describing the opportunity cost of two producers,economists use the term

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks.Which of the following is not possible?