Question 1

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage in:

Accepted Answer

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Question 2

Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?

Accepted Answer

The answer of Suppose an American worker can make 100...

Question 3

When a producer has a comparative advantage in producing a good, it means the producer:

Accepted Answer

Comparative advantage refers to the ability of a producer to produce a good at a lower opportunity cost than others. This means that the producer can produce the good at a lower cost in terms of other goods that they could have produced instead. Therefore, the producer can trade with others and gain a mutually beneficial outcome. Option A refers to absolute advantage, which is different from comparative advantage. Option C is incorrect as having a comparative advantage means a reason to trade with others. Option D is not necessarily true as a producer with a comparative advantage may still have room for improvement in production efficiency.

Question 4

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato in Country B is:

Accepted Answer

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Question 5

Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. Jerry has a comparative advantage in:

Accepted Answer

To determine comparative advantage, we need to compare the opportunity cost of producing each good between Tom and Jerry.

The opportunity cost of producing one dish for Tom is the production of 1/4 of a fence (16 dishes / 4 fences = 4 dishes/fence). 
The opportunity cost of producing one dish for Jerry is the production of 1/2 of a fence (14 dishes / 7 fences = 2 dishes/fence).

Therefore, Jerry has a lower opportunity cost of producing fences (2 dishes/fence) compared to Tom's opportunity cost (4 dishes/fence). Hence, Jerry has a comparative advantage in fence production.

Question 6

When a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer:

Accepted Answer

When a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer has a comparative advantage at producing that good. This means that the producer can produce that good at a lower cost, and therefore can sell it at a lower price or make a greater profit. The producer may still choose to trade with others to obtain goods or services that they have a higher opportunity cost of producing.

Question 7

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true? Bangladesh should:

Accepted Answer

Bangladesh should specialize in glove production since it possesses the comparative advantage in glove production. Comparative advantage is found by comparing the opportunity cost of producing a good. The opportunity cost of producing gloves in Bangladesh is 2 radishes (100 gloves/200 radishes), while the opportunity cost of producing gloves in the US is 6 radishes (50 gloves/300 radishes). Therefore, Bangladesh has a lower opportunity cost of producing gloves and should specialize in glove production, while the US should specialize in radish production.

Question 8

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. The opportunity cost of one pair of gloves is:

Accepted Answer

The answer of Suppose an American worker can make 50...

Question 9

The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage in the production of apple pie, then:

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The answer of The United States and Canada trade hockey...

Question 10

Suppose an American worker can make 100 chairs or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 chairs or catch 400 fish per day. The United States has an absolute advantage in the production of both fish and chairs. This means that the United States:

Accepted Answer

The answer of Suppose an American worker can make 100...

Question 11

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concepts of absolute and comparative advantage, we can say that the United States has the comparative advantage in:

Accepted Answer

The answer of Suppose an American worker can make 50...

Question 12

Which of the following statements about absolute and comparative advantage is not true? A country may have:

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Question 13

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is __________ for the United States than Canada, so Canada has the ______________ advantage in shoe production.

Accepted Answer

The opportunity cost of producing a pair of shoes in the United States is 5 apples (100/20), while the opportunity cost of producing a pair of shoes in Canada is 2 apples (20/10). Therefore, the opportunity cost of a pair of shoes is higher in the United States than in Canada, indicating that Canada has a comparative advantage in shoe production.

Question 14

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato in Country A is:

Accepted Answer

The answer of Suppose that a worker in Country A...

Question 15

Suppose an American worker can make 100 chairs or catch 1000 fish per day. On the other hand, a Chilean worker can produce 40 chairs or catch 400 fish per day. The United States possesses a(n) _______________ advantage in chair production, but not a(n) ______________ advantage in fish production.

Accepted Answer

The answer of Suppose an American worker can make 100...

Question 16

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concept of absolute advantage, which of the following statements is true? The United States:

Accepted Answer

The concept of absolute advantage refers to the ability to produce a good or service using fewer inputs than another producer. In this case, the Bangladeshi worker can produce 100 pairs of gloves, while the American worker can only produce 50. Therefore, Bangladesh has the absolute advantage in glove production. Similarly, the American worker can produce 300 radishes, while the Bangladeshi worker can only produce 200. Therefore, the US has the absolute advantage in radish production. Choice D states that the US has the absolute advantage in radish production but not gloves, which is correct based on the information given.

Question 17

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Canada has the ____________ opportunity cost of a pair of shoes than the United States, so: ____________.

Accepted Answer

Canada has a lower opportunity cost of producing a pair of shoes than the United States (1/10 pairs of shoes for Canada vs. 1/20 pairs of shoes for the United States). Therefore, Canada should specialize in producing shoes and trade with the United States for apples. This way, both countries can maximize their production and benefits from the trade.

Question 18

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concepts of advantage and trade, we can say that the opportunity cost of one pair of gloves is:

Accepted Answer

The opportunity cost of one pair of gloves for the United States is 6 radishes (300 radishes produced per day ÷ 50 gloves produced per day). The opportunity cost of one pair of gloves for Bangladesh is 2 radishes (200 radishes produced per day ÷ 100 gloves produced per day). Therefore, the United States has a comparative advantage in radish production (lower opportunity cost compared to Bangladesh), and Bangladesh has a comparative advantage in glove production (lower opportunity cost compared to the United States).

Question 19

Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. Because Tom has a ____________ opportunity cost for one fence compared to Jerry, we know Tom has _________________________.

Accepted Answer

The answer of Tom and Jerry have two tasks to...

Question 20

When a producer has an absolute advantage at producing a good, it means the producer:

Accepted Answer

Absolute advantage refers to the ability of a producer to produce a greater quantity of a good or service than competitors using the same amount of resources.

Quiz 2: Specialization and Exchange

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage in:

Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?

When a producer has a comparative advantage in producing a good, it means the producer:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato in Country B is:

When a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer:

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true? Bangladesh should:

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. The opportunity cost of one pair of gloves is:

The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage in the production of apple pie, then:

Suppose an American worker can make 100 chairs or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 chairs or catch 400 fish per day. The United States has an absolute advantage in the production of both fish and chairs. This means that the United States:

Which of the following statements about absolute and comparative advantage is not true? A country may have:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato in Country A is:

Suppose an American worker can make 100 chairs or catch 1000 fish per day. On the other hand, a Chilean worker can produce 40 chairs or catch 400 fish per day. The United States possesses a(n) _ advantage in chair production, but not a(n) advantage in fish production.

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concept of absolute advantage, which of the following statements is true? The United States:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Canada has the opportunity cost of a pair of shoes than the United States, so: .

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concepts of advantage and trade, we can say that the opportunity cost of one pair of gloves is:

When a producer has an absolute advantage at producing a good, it means the producer: