Question 1

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 different opportunity costs for producing those two products. The opportunity cost of shoes is the inverse of the opportunity cost of soccer balls, meaning that producing one more unit of shoes incurs a higher opportunity cost in terms of soccer balls than producing one more unit of soccer balls incurs in terms of shoes. Therefore, Korea should specialize in producing the good in which it has a comparative advantage, which is the good with the lower opportunity cost. This will allow Korea to maximize its production and consumption possibilities and benefit from trade with other countries.

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

The opportunity cost of a bushel of corn multiplied by the opportunity cost of a bushel of cotton is the ratio of the two opportunity costs. Since the farmer is only growing corn or cotton, the opportunity cost of one crop in terms of the other is the inverse of the amount that could have been produced if the farmer had chosen to grow that crop exclusively. Therefore, if the farmer can produce x bushels of corn or y bushels of cotton, his opportunity cost of producing one bushel of corn is y/x and his opportunity cost of producing one bushel of cotton is x/y. Therefore, the ratio of the opportunity costs is (y/x) / (x/y) = (y/x) x (y/x) = (y/x)^2. Since x and y are positive, the opportunity cost ratio is always greater than or equal to 1, and is equal to 1 only if the farmer can produce corn and cotton in the same ratio as their prices. Therefore, the correct answer is C, which implies that the farmer can produce corn and cotton in the same ratio as their prices.

Question 3

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

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

Question 4

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

Accepted Answer

It is not possible for Kelly to have a comparative advantage in both repairing cars and cooking meals because comparative advantage means that someone can produce a good or service at a lower opportunity cost than someone else. If Kelly had a comparative advantage in both, then there would be no basis for trade as both would have the same opportunity cost for each task.

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

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 7

Absolute advantage is found by comparing different producers'

Accepted Answer

Absolute advantage is found by comparing different producers' input requirements per unit of output. It involves analyzing which producer can produce a good or service with fewer resources or at a lower cost than another producer. Therefore, A, B, and D are not relevant to finding absolute advantage.

Question 8

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 9

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

Accepted Answer

It is possible for Jim to have a comparative advantage in both goods, but it is not possible for him to have an absolute advantage in one good and a comparative advantage in the other. This is because absolute advantage refers to the ability to produce a good with fewer resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost. It is not possible for Jim to have a lower opportunity cost in the production of one good and also require fewer resources to produce that same good. Therefore, option D is the only possible scenario.

Question 10

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 11

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 12

Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Accepted Answer

The answer of Travis can mow a lawn in two...

Question 13

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 can produce baseball bats at a lower cost (in terms of foregone alternative goods) than Tom. This means that Jim has a comparative advantage in producing baseball bats. Tom may still have an absolute advantage in the production of baseball bats (i.e. he can produce more bats in a given amount of time), but that is not relevant to the question of comparative advantage.

Question 14

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 15

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. Therefore, the correct answer is B, which states that the opportunity cost of an item is what you give up to get that item. The other answer choices are not accurate definitions of opportunity cost.

Question 16

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

To produce one cantaloupe, the farmer sacrifices 1.5 watermelons. Therefore, the opportunity cost of one watermelon is 2/3 of a cantaloupe. Option A cannot be determined from the given information. Option B is not necessarily true since comparative advantage depends on the opportunity cost of production. Option D cannot be determined from the given information.

Question 17

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 being 2/5 bushel of tomatoes means that for every bushel of squash produced, the gardener is giving up the opportunity to produce 2/5 bushel of tomatoes. Therefore, the opportunity cost of producing one bushel of tomatoes is the inverse: for every bushel of tomatoes produced, the gardener is giving up the opportunity to produce 5/2 bushels of squash (which is the reciprocal of 2/5).

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

What must be given up to obtain an item is called

Accepted Answer

Opportunity cost is the cost of the next best alternative forgone in order to obtain the desired item. It refers to the benefits that could have been gained from the next best alternative but were not because of the decision to choose the desired item. Out-of-pocket cost refers to the actual amount of money spent on an item, comparative worth refers to the value of an item compared to other items, and absolute value refers to the intrinsic value of something. None of these terms fully capture the concept of what is given up in order to obtain an item, making C the best choice.

Question 20

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

To find the opportunity cost of 1 chair, we need to compare the amount of tables each woodworker could have made instead of the chairs they chose to make.

For Ken, he can make 3 tables or 18 chairs, so the opportunity cost of 1 chair is 1/3 of a table (3 tables / 18 chairs = 1/3 table).

For Traci, she can make 8 tables or 24 chairs, so the opportunity cost of 1 chair is 1/3 of a table (8 tables / 24 chairs = 1/3 table).

Therefore, the answer is A) 1/6 table for Ken and 1/3 table for Traci.

Quiz 3: Interdependence and the Gains From Trade

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

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

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

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

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?

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,

Absolute advantage is found by comparing different producers'

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.

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

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

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

Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

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

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?

The opportunity cost of an item is

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

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

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

What must be given up to obtain an item is called

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