Question 1

Comparative advantage is based on opportunity costs.

Accepted Answer

Comparative advantage refers to the ability of a country or firm to produce a good or service at a lower opportunity cost than other countries or firms. It is based on the idea of opportunity cost, which means the cost of forgoing an alternative option. In other words, when choosing to produce a particular good or service, a country or firm must give up the opportunity to produce something else. The cost of giving up that alternative option is the opportunity cost, and it is the basis of comparative advantage.

Question 2

Suppose you have purchased a non-refundable plane ticket and,at the last moment,you 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?

Accepted Answer

The answer of Suppose you have purchased a non-refundable plane...

Question 3

A university should not disband its football team if it has already paid for the stadium.

Accepted Answer

The answer of A university should not disband its football...

Question 4

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

Accepted Answer

The law of comparative advantage states that a person should produce a good if she has the lowest opportunity cost of producing that good. This means that the person can produce the good at a lower cost (in terms of other goods and services that could be produced instead) than anyone else. Therefore, choice (B) is the correct answer.

Question 5

The term opportunity cost suggests that

Accepted Answer

Opportunity cost refers to the idea that to gain one thing, something else must be given up due to the scarcity of resources. Therefore, the correct option is E. Option A is incorrect because not all exchanges result in a loss for the other party. Option B is incorrect because it is not related to the concept of opportunity cost. Option C is incorrect because it assumes that executives always have an opportunity to make a profit. Option D is incorrect because decision making involves considering factors other than cost, such as benefits and opportunity cost.

Question 6

Opportunity cost is objective; therefore,its value does not change as circumstances change.

Accepted Answer

Opportunity cost is not objective and it can change as circumstances change. It depends on the alternatives available and the value placed on each alternative, both of which can fluctuate.

Question 7

It is possible for one person to have a comparative advantage in the production of all products?

Accepted Answer

It is highly unlikely for one person to have a comparative advantage in the production of all products as each product requires different skills, resources, and knowledge. Comparative advantage is based on the principle of specialization and trade, where each person or country specializes in producing the goods and services in which they have a lower opportunity cost, leading to increased efficiency and output in the global market.

Question 8

Which economic concept does the expression "time is money" reflect?

Accepted Answer

The expression "time is money" reflects the economic concept of opportunity cost. This is because time is a limited resource, and choosing to spend time on one activity means giving up the opportunity to engage in another activity that could potentially generate income or other benefits. Therefore, in economic terms, time can be translated into money due to the opportunity cost of using it for one purpose over another.

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 individuals, firms, or countries should specialize in producing goods for which they have the lowest opportunity cost of production. Opportunity cost is the value of the next best alternative that must be forgone in order to pursue a certain action. Therefore, the person who has the lowest opportunity cost of producing a good will be foregoing the least amount of other goods or services in order to produce that good, making them the most efficient producer.

Question 10

Sunk costs

Accepted Answer

The answer of Sunk costs
...

Question 11

The law of comparative advantage says that

Accepted Answer

The law of comparative advantage states that individuals or countries should specialize in producing the goods they have the lowest opportunity cost in producing. This means that they are giving up the least amount of other goods or resources to produce it, making it the most efficient choice. This does not necessarily mean that they have an absolute advantage in producing the good, just a comparative advantage. Therefore, choice A is the correct answer.

Question 12

A test was scheduled for Monday morning,but you went to a party on Saturday night.If you hadn't attended the party,you could have studied for the test or gone to a movie.Which of the following is true?

Accepted Answer

The answer of A test was scheduled for Monday morning,but...

Question 13

The opportunity cost of a particular activity

Accepted Answer

The answer of The opportunity cost of a particular activity
...

Question 14

If you enjoy playing golf,the opportunity cost of cleaning your room

Accepted Answer

The answer of If you enjoy playing golf,the opportunity cost...

Question 15

If you and I agree to exchange four ginger snaps for one chocolate chip cookie,then it must be true that

Accepted Answer

The answer of If you and I agree to exchange...

Question 16

Which economic concept does the expression "there's no such thing as a free lunch" reflect?

Accepted Answer

The expression "there's no such thing as a free lunch" reflects the concept of opportunity cost. It means that every choice involves a cost, even if it is not immediately apparent. In other words, if you receive something for free, it does not mean that it is actually "free", as there may be hidden costs that you are not aware of. Therefore, every decision we make involves a trade-off between different alternatives and their respective opportunity costs.

Question 17

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

The answer of Melissa is a self-employed lawyer who chooses...

Question 18

Comparative advantage is

Accepted Answer

Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another individual or country. This means that one can produce a good using fewer resources or by sacrificing less of another good in order to produce it. This is the driving force behind international trade, as countries can specialize in producing goods in which they have a comparative advantage and trade with other countries for goods in which they do not.

Question 19

The opportunity cost of an activity is best measured

Accepted Answer

The opportunity cost of an activity is the value that must be given up in order to pursue a certain action. This value is measured by the benefits that could have been received from the best alternative that is forgone. Therefore, the best answer is D - by the value expected from the best alternative that is forgone.

Question 20

If people specialize in producing those goods for which they possess a comparative advantage,then the economy as a whole can produce a greater quantity of goods.

Accepted Answer

This is the concept of comparative advantage, where individuals or nations specialize in producing goods or services at a lower opportunity cost than others. By trading with each other, they can increase the overall efficiency and productivity of the economy.

Quiz 2: Economic Tools and Economics Systems