Question 1

If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria,then:

Accepted Answer

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Question 2

The law of comparative advantage says that a person should produce a good if he or she:

Accepted Answer

The law of comparative advantage states that a person should produce a good if they have the lowest opportunity cost of producing that good. Opportunity cost is the value of the next best alternative given up when choosing one option over the other. Therefore, the person who has the lowest opportunity cost of producing a good has a comparative advantage in producing that good.

Question 3

If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning,then:

Accepted Answer

Having an absolute advantage in a task does not directly inform us about comparative advantage. Comparative advantage considers the opportunity cost of performing one task over another, which requires more information than just knowing who is absolutely better at a specific task.

Question 4

Suppose you have purchased a nonrefundable plane ticket and,at the last moment,cannot take the trip.You can,however,sell the ticket.If you paid $700 for the ticket,the cost of sending the ticket to someone through overnight mail is $20,and you spend $10 on a courier to get the ticket to the post office for overnight delivery,what is the minimum you should accept for the ticket?

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Question 5

John takes 10 minutes to iron a shirt and 20 minutes to type a paper.Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper.Which of the following statements is correct?

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Question 6

If one person has an absolute advantage in producing both of two goods,then that person:

Accepted Answer

Having an absolute advantage in producing both goods does not mean having a comparative advantage in both. Comparative advantage is about producing a good at a lower opportunity cost than others. It's possible for someone to have an absolute advantage in both goods but only a comparative advantage in one, because comparative advantage is relative to the trade-offs between producing different goods.

Question 7

The law of comparative advantage does not apply to:

Accepted Answer

The law of comparative advantage applies to goods and services produced by individuals, firms, regions, and entire nations. However, natural resources like air and sunshine are not considered goods or services that can be produced or traded, and therefore the law of comparative advantage does not apply to them.

Question 8

Sunk costs:

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Question 9

The law of comparative advantage states that the person who should produce a good is the person who:

Accepted Answer

The law of comparative advantage states that a person should specialize in producing goods for which they have the lowest opportunity cost. Opportunity cost refers to the cost of an alternative that must be forgone in order to pursue a certain action. So, the person who has the lowest opportunity cost of producing a good will be the most efficient and effective producer of that good.

Question 10

The law of comparative advantage says that:

Accepted Answer

The law of comparative advantage states that the individual with the lowest opportunity cost of producing a particular good should produce it, which means that they have a comparative advantage in producing that good. This allows for specialization and trade, leading to mutual gains for both parties involved. The other choices are incorrect because they either confuse absolute advantage with comparative advantage or make incorrect claims about the conditions for gains from trade.

Question 11

If Jason can wash a car in 20 minutes and wash a dog in 10 minutes and Megan can wash a car in 15 minutes and wash a dog in 15 minutes,which of the following statements is true?:

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Question 12

If Sam can chop up more carrots per minute than Joe can,then:

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Question 13

Comparative advantage refers to:

Accepted Answer

Comparative advantage is the ability of an individual, firm, or country to produce a particular good at a lower opportunity cost (in terms of other goods that they could also produce) than some other producer. This means that they can produce that good more efficiently than others, and therefore should specialize in producing that good and trade with others to acquire goods that they cannot produce as efficiently.

Question 14

A country has an absolute advantage in the production of a good if that country:

Accepted Answer

Absolute advantage is determined by comparing the production efficiency of two countries for a given product. A country has an absolute advantage in the production of a good if it can produce more output using the same or less input compared to another country.

Question 15

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing,then:

Accepted Answer

Comparative advantage does not necessarily imply absolute advantage in any particular activity. It simply means that each individual can produce a certain good or service at a lower opportunity cost than the other. Therefore, we cannot conclude anything about absolute advantage from the given information.

Question 16

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

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Question 17

Janis mows the lawn in 1 hour and types a paper in 1 hour.Kristen mows the lawn in 2 hours and types a paper in 1 hour.Which of the following statements is true?

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Question 18

If Robin has an absolute advantage in both gardening and baking when compared to Robert,then:

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Question 19

Melissa is a self-employed lawyer who chooses a higher-priced restaurant 2 miles from home over a cheaper restaurant 15 miles from home.Which of the following is the most likely explanation for her behavior?

Accepted Answer

Melissa likely values her time highly, as a self-employed lawyer. Traveling further to the cheaper restaurant would consume more of her time, which has a high opportunity cost. Thus, the higher monetary cost of the closer, more expensive restaurant is justified by saving time, reducing the overall opportunity cost compared to traveling further to the cheaper restaurant.

Question 20

The opportunity cost of an activity is best measured:

Accepted Answer

The opportunity cost of an activity is the value of the next best alternative that is foregone in order to pursue that activity. It is not just the monetary cost or number of alternative activities forgone, but rather the cost difference between the chosen activity and the next best alternative. Option D correctly identifies the best way to measure opportunity cost.

Quiz 2: Economic Tools and Economic Systems