Question 1

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, which means that to produce one bushel of squash, the gardener has to give up 2/5 bushel of tomatoes. Therefore, the opportunity cost of 1 bushel of tomatoes is the reciprocal of 2/5, which equals 5/2 bushels of squash.

Question 2

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 the production of baseball bats and hockey sticks, but it is not possible for Jim to have an absolute advantage in both goods. Option A is not possible because one person cannot have an absolute advantage in both goods. Option B is possible because Jim can have an absolute advantage in one good (baseball bats) and a comparative advantage in another good (hockey sticks). Option C is possible because Jim can have an absolute advantage in one good (hockey sticks) and a comparative advantage in another good (baseball bats). Option D is possible and is the correct answer because this describes a situation where Jim has a comparative advantage in both goods, which occurs when his opportunity cost of producing one good is lower than Tom's opportunity cost of producing that same good.

Question 3

The opportunity cost of an item is

Accepted Answer

The opportunity cost of an item is what you give up to get that item. It's the value of the next best alternative that is forgone in order to choose one option.

Question 4

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 5

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 calculate the opportunity cost of 1 chair, we need to look at how many tables Ken and Traci can produce in place of 18 chairs (which is the equivalent of the maximum number of chairs Ken can produce in a month).

For Ken:
3 tables = 18 chairs
1 table = 6 chairs 
Therefore, the opportunity cost of 1 chair for Ken is 1/6 of a table.

For Traci:
8 tables = 24 chairs 
1 table = 3 chairs 
Therefore, the opportunity cost of 1 chair for Traci is 1/3 of a table.

Since we're looking for the opportunity cost of 1 chair in terms of both Ken and Traci, we can see that the correct answer is A) 1/6 table for Ken and 1/3 table for Traci.

Question 6

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

The concept of opportunity cost is central to comparative advantage, which refers to the ability of an individual or group to produce a particular good or service at a lower opportunity cost than others. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost, then Jim has a comparative advantage in the production of baseball bats.

Question 7

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

To find the opportunity cost of 1 bushel of tomatoes, we need to calculate how many bushels of squash the gardener must give up. We can set up a ratio of squash given up to tomatoes gained: 
8 bushels of squash / 5 bushels of tomatoes
To simplify this ratio, we can divide both numbers by the lowest common factor, which is 1: 
8/5 = 1.6
This means that for every 1 bushel of tomatoes, the gardener must give up 1.6 bushels of squash. Therefore, the opportunity cost of 1 bushel of tomatoes is 1.6 bushels of squash.

Question 8

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 9

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 10

What must be given up to obtain an item is called

Accepted Answer

Opportunity cost refers to the value of the next best alternative that must be given up in order to obtain a certain item. It reflects the cost of the forgone opportunity and is often used in decision-making processes. Out-of-pocket cost refers to the actual amount of money paid for a certain item, while comparative worth and absolute value are not directly related to the concept of giving up something to obtain another item.

Question 11

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 one watermelon is the number of cantaloupes that must be sacrificed in order to produce that watermelon. For each cantaloupe produced, 1.5 watermelons must be sacrificed, so the opportunity cost of one watermelon is 2/3 of a cantaloupe (1/1.5 = 2/3). The information given does not allow us to determine the farmer's production possibilities frontier or whether he has a comparative advantage over other farmers.

Question 12

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 13

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 either shoes or soccer balls or some combination of the two, then to determine which product it should specialize in, we need to look at the opportunity cost of producing each product. The opportunity cost of producing one good is the inverse of the opportunity cost of producing the other. Therefore, the best choice is D.

Question 14

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 15

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 a good is defined as the amount of the other good that must be given up to produce it. Since the farmer has the ability to grow either corn or cotton, the opportunity cost of producing one bushel of corn is the amount of cotton that must be given up, and vice versa. Therefore, the opportunity cost of corn multiplied by the opportunity cost of cotton is always equal to 1, since they are inverse of each other. It does not matter if the farmer produces only corn or only cotton or some combination of the two. Therefore, the correct answer is C.

Question 16

Absolute advantage is found by comparing different producers'

Accepted Answer

Absolute advantage is determined by comparing the input requirements per unit of output for different producers. The producer that can produce the same output using fewer resources has an absolute advantage.

Question 17

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 18

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 possible for both individuals to have a comparative advantage in both tasks. This is because comparative advantage is based on the opportunity cost of producing one good over the other. If both individuals have a comparative advantage in both tasks, then they would be equally efficient in producing both goods, and there would be no gains from trade. Therefore, option C is not possible.

Question 19

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 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 table is

Accepted Answer