Question 1

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 Suppose John and Joe each have different...

Question 2

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

Specialization is beneficial as long as each person specializes in the good where they have a comparative advantage, meaning they have a lower opportunity cost of producing that good compared to the other person. Looking at the table, we can see that Sheila has a lower opportunity cost of producing oranges while Bruce has a lower opportunity cost of producing apples. Therefore, if they specialize in these goods, they can produce more overall and gain from specialization.

Question 3

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 4

A property right is

Accepted Answer

Property rights are the social arrangements that govern the ownership, use, and disposal of anything that people value. They provide the basis for individuals and businesses to own and trade assets and resources in a market economy. A) is a definition of a means of payment, B) is a definition of a firm, C) is a definition of a market, and E) is a definition of money.

Question 5

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

Accepted Answer

The answer of It pays for people to specialize and...

Question 6

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 7

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 8

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 either X or Y, then the opportunity cost of producing X is the same for A as it is for B, and the opportunity cost of producing Y is also the same for A as it is for B. Therefore, A and B have the same opportunity costs for X and Y.

Question 9

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 correct as markets provide information necessary for buyers and sellers to make informed decisions about prices, quality, and availability of goods and services.

Statement II is incorrect as while geographic locations may sometimes be used to define markets, markets can also exist in non-physical forms such as online marketplaces or financial markets.

Statement III is correct as markets have evolved over time as a result of the need for buyers and sellers to exchange goods and services, and they facilitate trade by allowing for efficient exchange of information and resources.

Question 10

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.

Question 11

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

To find the opportunity cost of producing an additional unit of Y, we need to look at the slope of the production possibilities frontier (PPF). The slope of PPF shows the trade-off between producing X and Y. As we move from left to right along the PPF for Vulcan, we see that for every two additional units of Y produced, three units of X must be given up. This means the opportunity cost of producing an additional unit of Y is 3/2 units of X (or 1.5 units of X). Therefore, the best choice is to produce at point B, which maximizes the production of both X and Y.

Question 12

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 less time to make a sandwich than to cook an egg, while Jerry takes less time to cook an egg than to make a sandwich. This means that Tom has a higher opportunity cost for making a sandwich (losing out on the time he could spend cooking eggs) and Jerry has a higher opportunity cost for cooking eggs (losing out on the time he could spend making sandwiches). Specialization and trade would allow Tom to focus on cooking eggs (producing more in less time) and Jerry to focus on making sandwiches (producing more in less time). By trading their respective products, they can both benefit from each other's specialization, resulting in mutual gain.

Question 13

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

To determine who should specialize in which good, we need to calculate the opportunity cost of producing each good for each person. 
For Sheila, the opportunity cost of producing an additional unit of X is 2 units of Y (60/30). 
For Bruce, the opportunity cost of producing an additional unit of X is 0.4 units of Y (16/40). 
Therefore, Bruce should specialize in producing good X since his opportunity cost of producing it is lower, and Sheila should specialize in producing good Y. 
Also, option C is true, as we have calculated above. So, the correct answer is E.

Question 14

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

To find the opportunity cost of producing an additional unit of Y, we look at the slope of the production possibilities frontier for Y. For Romulus, the slope of the Y frontier is -2/3, which means that for every unit of Y produced, 2/3 units of X must be given up. Therefore, the opportunity cost of producing an additional unit of Y is 2/3 units of X.

As for the best choice(s), it is not specified what decision needs to be made, so it is impossible to provide an answer.

Question 15

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 16

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 17

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 18

Trade is organized using the social institutions of

Accepted Answer

The answer of Trade is organized using the social institutions...

Question 19

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

If Romulus specializes in producing Good X and Vulcan specializes in producing Good Y, then they can both produce at a point beyond their respective production possibilities frontiers. This means that both countries will gain from trade by exchanging their surplus goods. Therefore, option E is the best choice.

Question 20

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

The answer of Consider the following household.In 5 hours,Bob can...

Quiz 2: The Economic Problem