Question 1

The ability of an economy to increase the production of goods and services is:

Accepted Answer

Economic growth is the ability of an economy to increase its production of goods and services over time. This is usually measured by an increase in Gross Domestic Product (GDP), which reflects the total value of all goods and services produced within a country's borders. Economic growth is an important goal for many countries, as it can lead to higher standards of living and improved well-being for citizens. The other options, competitive advantage, opportunity cost, and comparative advantage, refer to different concepts in economics but do not directly relate to an economy's ability to increase production.

Question 2

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.6.What is Barney's opportunity cost of making a unicycle?

Accepted Answer

According to Table 2.6, Barney can either make 2 unicycles or 4 pogo sticks in a month. Therefore, his opportunity cost of making a unicycle is giving up the production of 2 pogo sticks (the next best alternative). The best choice for Barney would be to make pogo sticks, as his production output is higher for pogo sticks than unicycles.

Question 3

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.What is Serena's opportunity cost of making a necklace?

Accepted Answer

Serena's opportunity cost of making a necklace is what she gives up to make one more necklace, which is measured in terms of the other good, bracelets. If the information in Table 2.4 indicates that Serena sacrifices 1/2 of a bracelet to produce an additional necklace, then that is her opportunity cost.

Question 4

What shape does a production possibility frontier take if it displays increasing opportunity costs? What shape does a production possibility frontier take if it displays constant opportunity costs? Which shape is most common in production situations?
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Accepted Answer

The answer of What shape does a production possibility frontier...

Question 5

You have an absolute advantage whenever you________.

Accepted Answer

Absolute advantage refers to the ability of an individual, company, or country to produce more of a good or service than competitors, using the same amount of resources.

Question 6

What is economic growth?
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Accepted Answer

The answer of What is economic growth?
__________________________________________________________________________________________________________________________________________________________________________________________...

Question 7

What is a production possibility frontier? What do points along the frontier represent? What do points inside and outside the frontier represent?
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Accepted Answer

The answer of What is a production possibility frontier? What...

Question 8

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.Which of the following statements is true?

Accepted Answer

To determine comparative advantage, we need to compare the opportunity cost of producing one good in terms of the other good. For Haley, the opportunity cost of producing one bracelet is 2 necklaces, while the opportunity cost of producing one necklace is 0.5 bracelets. This means Haley has a comparative advantage in making necklaces. For Serena, the opportunity cost of producing one bracelet is 1.5 necklaces, while the opportunity cost of producing one necklace is 0.75 bracelets. This means Serena has a comparative advantage in making necklaces. Therefore, Serena has a comparative advantage in making necklaces, while Haley has a comparative advantage in making bracelets.

Question 9

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.What is Haley's opportunity cost of making a necklace?

Accepted Answer

From Table 2.4, we can see that Haley can either make 4 bracelets or 3 necklaces in a week. Therefore, the opportunity cost of making a necklace for Haley is the number of bracelets she could have made instead.

Opportunity Cost of making a necklace for Haley = 4 bracelets - 3 bracelets = 1 bracelet

So, Haley's opportunity cost of making a necklace is 3/4th of a bracelet.

As for the best choice(s), it depends on the goal of the jewellers. If they want to maximize the number of bracelets produced, then both Serena and Haley should only make bracelets. However, if they want to produce more necklaces, then they should specialize in making necklaces. Additionally, they could consider a combination of making both bracelets and necklaces to maximize total output.

Question 10

On a diagram of a production possibility frontier, economic growth is represented by the slope of the production possibility frontier.

Accepted Answer

Economic growth is represented by an outward shift of the production possibility frontier (PPF), not by the slope of the PPF. The slope represents the opportunity cost of producing one good over another.

Question 11

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5.What is Fred's opportunity cost of making a pogo stick?

Accepted Answer

The answer of Table 2.5  Table 2.5 shows the...

Question 12

a.Draw a production possibility frontier for a country that produces two goods, beer and pretzels.Assume that resources are equally suited to both tasks.
b.Define opportunity costs.
c.Use your production possibility frontier graph to demonstrate the principle of opportunity costs.
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Accepted Answer

The answer of a.Draw a production possibility frontier for a...

Question 13

What is meant by the term 'opportunity cost'?
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Accepted Answer

The answer of What is meant by the term 'opportunity...

Question 14

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.Haley's opportunity cost of making a bracelet is:

Accepted Answer

To calculate Haley's opportunity cost of making a bracelet, we need to look at the ratio of how much she can produce per week. She can produce 2 necklaces or 2 2/3 bracelets per week. Therefore, the opportunity cost of making one bracelet is: 
1 bracelet = 2 necklaces/2 2/3 bracelets 
1 bracelet = 6/8 necklaces 
1 bracelet = 3/4 necklaces 
So, Haley's opportunity cost of making a bracelet is 3/4 of a necklace. 
The best choice(s) would be to have Serena make bracelets and Haley make necklaces, as this will maximize their total output per week (5 bracelets and 4 necklaces).

Question 15

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.Which of the following statements is true?

Accepted Answer

To determine absolute advantage, we compare the output of each jeweler in both products. Haley produces more bracelets and necklaces per week than Serena, but she has a higher total output in bracelets. Therefore, Haley has an absolute advantage in making bracelets and Serena has an absolute advantage in making necklaces. The answer is C.

Question 16

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5.What is Barney's opportunity cost of making a pogo stick?

Accepted Answer

The answer of Table 2.5  Table 2.5 shows the...

Question 17

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5.Which of the following statements is true?

Accepted Answer

To determine comparative advantage, we need to calculate the opportunity cost of producing each product. The opportunity cost of producing pogo sticks for Fred is 2/3 unicycles, while the opportunity cost for Barney is 1/2 unicycles. Therefore, Barney has a lower opportunity cost of producing unicycles, meaning he has a comparative advantage in producing them. Similarly, the opportunity cost of producing unicycles for Fred is 1.5 pogo sticks, while the opportunity cost for Barney is only 1 pogo stick. Therefore, Fred has a lower opportunity cost of producing pogo sticks, meaning he has a comparative advantage in producing them. Thus, Barney has a comparative advantage in making unicycles and Fred has a comparative advantage in making pogo sticks.

Question 18

Table 2.4  Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.4.What is Serena's opportunity cost of making a bracelet?

Accepted Answer

Serena's opportunity cost of making a bracelet is the amount of the other good (necklaces) that she must give up. If the table suggests she can make 2 necklaces or 1 bracelet with her resources, then the opportunity cost of 1 bracelet is the 2 necklaces she cannot make.

Question 19

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5.Which of the following statements is true?

Accepted Answer

The answer of Table 2.5  Table 2.5 shows the...

Question 20

Table 2.5  Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5.What is Fred's opportunity cost of making a unicycle?

Accepted Answer

Fred's opportunity cost of making a unicycle is the amount of other goods or services (in this case, pogo sticks) that he has to give up to produce one more unicycle. If Fred can produce 3 pogo sticks in the time it takes to make 1 unicycle, then the opportunity cost of a unicycle is 3 pogo sticks.

Quiz 2: Choices and Trade-Offs in the Market

The ability of an economy to increase the production of goods and services is:

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.6.What is Barney's opportunity cost of making a unicycle?

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.What is Serena's opportunity cost of making a necklace?

You have an absolute advantage whenever you________.

What is economic growth? __________________________________________________________________________________________________________________________________________________________________________________________

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.Which of the following statements is true?

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.What is Haley's opportunity cost of making a necklace?

On a diagram of a production possibility frontier, economic growth is represented by the slope of the production possibility frontier.

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.What is Fred's opportunity cost of making a pogo stick?

What is meant by the term 'opportunity cost'? __________________________________________________________________________________________________________________________________________________________________________________________

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.Haley's opportunity cost of making a bracelet is:

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.Which of the following statements is true?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.What is Barney's opportunity cost of making a pogo stick?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.Which of the following statements is true?

Table 2.4 Table 2.4 shows the output per week of two jewellers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2.4.What is Serena's opportunity cost of making a bracelet?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.Which of the following statements is true?

Table 2.5 Table 2.5 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.What is Fred's opportunity cost of making a unicycle?