Question 1

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is

Accepted Answer

The opportunity cost of 1 chair for Ken is the number of tables he could have made instead. Since he can make 3 tables or 18 chairs, the opportunity cost of 1 chair for Ken is 1/3 of a table. Similarly, the opportunity cost of 1 chair for Traci is 1/8 of a table. Therefore, the correct answer is A) 1/6 table for Ken and 1/3 table for Traci.

Question 2

A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

Accepted Answer

Since the farmer has the ability to grow either corn or cotton, his opportunity cost of producing one bushel of either crop is the quantity of the other crop forgone. This means that the opportunity cost of a bushel of corn multiplied by the opportunity cost of a bushel of cotton is always equal to 1. Therefore, the correct answer is C.

Question 3

Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is

Accepted Answer

The opportunity cost of one bushel of squash is 2/5 bushel of tomatoes. This means that in order to produce one bushel of squash, the gardener gives up the opportunity to produce 2/5 bushel of tomatoes. To find the opportunity cost of one bushel of tomatoes, we need to flip this ratio: 1 bushel of tomatoes is equivalent to producing 5/2 bushels of squash (since 2/5 is the same as 5/2 when flipped). Therefore, the opportunity cost of 1 bushel of tomatoes is 5/2 bushels of squash.

Question 4

The opportunity cost of an item is

Accepted Answer

Opportunity cost is defined as the value of the next best alternative that must be given up in order to pursue a certain action. In other words, it is what you have to sacrifice in order to obtain something else. Therefore, the correct answer is B - what you give up to get that item. The other options are incorrect because they do not accurately describe opportunity cost.

Question 5

Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

Accepted Answer

The answer of Assume for the United States that the...

Question 6

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

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 7

Absolute advantage is found by comparing different producers'

Accepted Answer

Absolute advantage is determined by comparing the input requirements per unit of output of different producers. It does not consider opportunity costs, payments to land, labor, and capital or locational and logistical circumstances.

Question 8

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

Accepted Answer

The concept of comparative advantage states that even if one producer has an absolute advantage in the production of both goods, there is still room for gains from trade if each specializes in the good(s) in which they have a lower opportunity cost to produce. Therefore, it is possible for Jim to have a comparative advantage in the production of both goods.

Question 9

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

Accepted Answer

According to the principle of comparative advantage, it is not feasible for an individual to have a comparative advantage in both tasks. Therefore, option C is not possible. The other scenarios are possible because an individual can have an absolute advantage in one task and a comparative advantage in the other task.

Question 10

Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of these pairs of points could be on Brazil's production possibilities frontier?

Accepted Answer

For every 1 cashew produced, Brazil gives up the opportunity to produce 100 peanuts. 
Therefore, the production possibilities frontier will have a negative slope of -100. 
Choice A has a slope of (-30,000+35,000)/(200-150) = 100, which is the opportunity cost of producing cashews. 
Choice B has a slope of (-30,000+40,000)/(200-150) = 200, which means for every 1 cashew produced, Brazil gives up the opportunity to produce 200 peanuts, which is not in line with the given opportunity cost. 
Choice C has a slope of (-50,000+60,000)/(200-300) = 100, which is the opportunity cost of producing cashews. 
Choice D has a slope of (-60,000+80,000)/(200-300) = 200, which again, is not in line with the given opportunity cost. 
Therefore, choice A is the only possible combination that fits the given opportunity cost of cashews and peanuts.

Question 11

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,

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 12

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

Accepted Answer

If Jim's opportunity cost of producing baseball bats is lower than Tom's, then Jim has a comparative advantage in the production of baseball bats. This means that Jim could produce baseball bats at a lower cost (in terms of giving up other goods or services he could produce) than Tom, and should specialize in producing baseball bats while Tom should focus on producing the other good or service in which he has a lower opportunity cost.

Question 13

Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is

Accepted Answer

Opportunity cost can be calculated as the ratio of the cost of one option to the cost of the other option forgone. The gardener gives up 8 bushels of squash to get 5 bushels of tomatoes. So, the opportunity cost of 1 bushel of tomatoes is 8/5 or 1.6 bushels of squash. Therefore, the answer is B.

Question 14

What must be given up to obtain an item is called

Accepted Answer

Opportunity cost is the cost of the next best alternative that must be given up in order to obtain something. This concept is used to make decisions between different options and to understand the full cost of a decision. Out-of-pocket cost refers to the actual money spent on an item, while comparative worth and absolute value are not relevant to the cost of obtaining an item.

Question 15

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

Accepted Answer

The opportunity cost of producing one cantaloupe is sacrificing 1.5 watermelons, therefore the opportunity cost of one watermelon is 2/3 of a cantaloupe. This means that the farmer has a comparative advantage in producing cantaloupes since the opportunity cost of producing one cantaloupe is lower than the opportunity cost of producing one watermelon. However, we cannot determine the number of watermelons the farmer can produce with all of his available resources based solely on the information given in the problem, so option A is incorrect. Option B is incorrect because the information provided does not support the statement. Option D is incorrect because the information given suggests that the production possibilities frontier is a straight line rather than bowed-out.

Question 16

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.

Accepted Answer

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

Question 17

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

Accepted Answer

If Korea is capable of producing both shoes and soccer balls, then it must have a comparative advantage in one of the products. The opportunity cost of producing a unit of one product is the amount of the other product which could have been produced instead. Therefore, if the opportunity cost of producing a unit of shoes is lower than the opportunity cost of producing a unit of soccer balls, then Korea has a comparative advantage in shoes. The inverse of the opportunity cost of producing shoes is the opportunity cost of producing soccer balls, so Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls. This information is useful in determining the relative costs of producing each good and helps to identify which good Korea should specialize in.

Question 18

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Accepted Answer

The answer of Ken and Traci are two woodworkers who...

Question 19

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is

Accepted Answer