Deck 2: Comparative Advantage

Question 1

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
For Ralph,the opportunity cost of selling a truck is:

A) 9 fewer cars sold.
B) 1/3 car not sold.
C) 3 fewer cars sold.
D) 1/4 car not sold.

Answer 1

1/4 car not sold.

Question 2

Larry has a comparative advantage in writing a term paper if he:

A) can write a paper faster than the other students in class.
B) has an absolute advantage in writing a term paper.
C) always earns an A on his papers.
D) has the lowest opportunity cost for writing a term paper.

Answer 2

D
Explanation: Comparative advantage means having a lower opportunity cost.

Question 3

To say that an individual possesses an absolute advantage in the production of software means that individual:

A) has a lower opportunity cost of producing software.
B) can produce more and/or higher quality software in a given amount of time.
C) was the first to create the software.
D) charges the lowest price for software.

Answer 3

B
Explanation: Absolute advantage means being able to do something in less time.

Question 4

If a nation can produce a good more quickly than any other nation,that nation has a(n):

A) comparative advantage.
B) absolute advantage.
C) relative advantage.
D) specialization advantage.

Question 5

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
For Larry,the opportunity cost of selling a truck is:

A) 10 fewer cars sold.
B) 1/2 car not sold.
C) 1 fewer car sold.
D) 2 fewer cars sold.

Question 6

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
______ should specialize in truck sales,and ______ should specialize in car sales.

A) Joe;Ralph
B) Ralph;Larry
C) Larry;Ralph
D) Larry;Joe

Question 7

Which of the following statements is always true?

A) Absolute advantage implies comparative advantage.
B) Comparative advantage does not require absolute advantage.
C) Absolute advantage requires comparative advantage.
D) Comparative advantage requires absolute advantage.

Question 8

Lou and Alex live together and share household chores.They like to cook some meals ahead of time and eat leftovers.Suppose that in one hour Lou and Alex can do the following: $$\begin{array} { | l | l | l | } \hline & \text { Alex } & \text { Lou } \\\hline \text { Whole Hour Cleaning } & 3 \text { rooms } & 5 \text { rooms } \\\hline \text { Whole Hour Cooking } & 3 \text { meals } & 4 \text { meals } \\\hline 1 / 2 \text { hour, Each Activity } & 1.5 \text { rooms; } 1.5 \text { meals } & 2.5 \text { rooms; } 2 \text { meals } \\\hline\end{array}$$
For Alex,the opportunity cost of cleaning one room is ____ meal(s);for Lou the opportunity cost of cleaning one room is _____ meal(s).

A) 4;4
B) 1;4/5
C) 1;5/4
D) 3;5

Question 9

If Jane can produce 3 pairs of shoes hourly,while Bob can produce 2,then one can infer that the __________ advantage belongs to __________.

A) absolute;Jane
B) comparative;Jane
C) comparative;Bob
D) comparative and absolute;Jane

Question 10

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
________ has an absolute advantage in selling cars and __________ has an absolute advantage in selling trucks.

A) Joe;Joe
B) Larry;Ralph
C) Ralph;Larry
D) Larry;Joe

Question 11

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
Joe's opportunity cost of selling a car is ______ than Ralph's,and Joe's opportunity cost of selling a car is ______ than Larry's.

A) less;greater
B) greater;less
C) less;less
D) greater;greater

Question 12

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour,then it must be the case that:

A) Leslie has a comparative advantage.
B) Leslie has an absolute advantage.
C) Eva has a comparative advantage.
D) Leslie has both comparative and absolute advantage.

Question 13

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } \hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$$
For Joe,the opportunity cost of selling a truck is:

A) 9 fewer cars sold.
B) 1 fewer cars sold.
C) 4 fewer cars sold.
D) 1/3 car not sold.

Question 14

Having a comparative advantage in a particular task means that:

A) you are better at it than other people.
B) you give up more to accomplish that task than do others.
C) you give up less to accomplish that task than do others.
D) you have specialized in that task,while others have not.

Question 15

Application of the Principle of Comparative Advantage leads to:

A) greater specialization of labor and other factors of production.
B) less specialization of labor and other factors of production.
C) societies without any specialization of labor.
D) lower total output.

Question 16

If Scout has an absolute advantage over Dill:

A) Scout has more money than Dill.
B) the problem of scarcity applies to Dill,but not to Scout.
C) the problem of scarcity applies to Scout,but not to Dill.
D) Scout can accomplish more in a given period of time than can Dill.

Question 17

If a nation has the lowest opportunity cost of producing a good,that nation has a(n):

A) comparative advantage.
B) absolute advantage.
C) comparative advantage and an absolute advantage.
D) absolute advantage and possibly a comparative advantage.

Question 18

Lou and Alex live together and share household chores.They like to cook some meals ahead of time and eat leftovers.Suppose that in one hour Lou and Alex can do the following: $$\begin{array} { | l | l | l | } \hline & \text { Alex } & \text { Lou } \\\hline \text { Whole Hour Cleaning } & 3 \text { rooms } & 5 \text { rooms } \\\hline \text { Whole Hour Cooking } & 3 \text { meals } & 4 \text { meals } \\\hline 1 / 2 \text { hour, Each Activity } & 1.5 \text { rooms; } 1.5 \text { meals } & 2.5 \text { rooms; } 2 \text { meals } \\\hline\end{array}$$
Alex and Lou have worked out an efficient arrangement.Under that arrangement:

A) Alex and Lou do half of the cooking and half of the cleaning.
B) Alex does all of the cleaning,while Lou does all the cooking.
C) Lou does all of the cleaning and half of the cooking.
D) Lou does all of the cleaning,while Alex does all of the cooking.

Question 19

The textbook notes that the last time a major league batter hit .400 was in 1941.This is because:

A) the average quality of batters has fallen.
B) the league imposes harsh penalties for steroid use.
C) specialization by pitchers,infielders,and outfielders has made it harder for batters to hit.
D) baseball diamonds have become larger.

Question 20

Which of the following is true?

A) Lou has both an absolute advantage and a comparative advantage over Alex in both tasks.
B) Alex has a comparative advantage over Lou in cleaning.
C) Lou has a comparative advantage over Alex in cleaning.
D) Lou has a comparative advantage over Alex in cooking.

Question 21

The United States generally has a comparative advantage in the development of technology because of:

A) larger amounts of natural resources.
B) a high concentration of the best research universities.
C) tax incentives.
D) the existence of patent law,which no other country provides.

Question 22

The production possibilities curve is:

A) the boundary that divides all production combinations into efficient and inefficient ones.
B) a graph illustrating the production combinations society would like to choose.
C) the boundary that divides all production combinations into attainable ones and unattainable ones.
D) a graph illustrating supply curves for different combinations of output.

Question 23

Any combination of goods that can be produced with currently available resources defines a(n):

A) attainable point on a production possibilities curve.
B) efficient point on a production possibilities curve.
C) inefficient point on a production possibilities curve.
D) attainable and efficient point on a production possibilities curve.

Question 24

This graph describes the production possibilities on the island of Genovia:
The opportunity cost of producing one car in Genovia is:

A) 5,000 tons of agricultural products.
B) 500 tons of agricultural products.
C) 5 tons of agricultural products.
D) 50 tons of agricultural products.

Question 25

If a producer is operating at an inefficient point on a production possibilities curve using currently available resources,that producer:

A) cannot produce more of one good without giving up some of the other good.
B) can produce more of one good without producing less of the other good.
C) must be at an unattainable point on the production possibilities curve.
D) must be specializing in activities for which it has a comparative advantage.

Question 26

Ginger and Maryann are lost in the jungle,where the only things to eat are mangoes and fish.Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann.Therefore:

A) Ginger should specialize in fishing because it is harder than gathering mangoes,and Maryann should specialize in gathering mangoes.
B) Ginger should strike out on her own,because Maryann reduces their combined productivity.
C) Maryann should specialize in the activity for which she has a comparative advantage.
D) Ginger should specialize in the activity for which she has an absolute advantage.

Question 27

This graph describes the production possibilities on the island of Genovia:
The opportunity cost of producing one ton of agricultural products in Genovia is:

A) 1,000 cars.
B) 1 car.
C) 1/5 of a car.
D) 1/50 of a car.

Question 28

The United States has a comparative advantage in producing books and movies because:

A) New York and Hollywood are the historic centers of book publishing and movie production.
B) wages for workers who print books and make movies are lower in the United States than elsewhere.
C) the English language is understood by many people all over the world.
D) the United States gives generous tax breaks to publishers and movie producers.

Question 29

The slope of any production possibilities curve is __________ because __________.

A) negative;more production of one good means less production of the other
B) constant;the tradeoff in production never changes
C) positive;more production of one good means more production of the other
D) positive;more production of one good means less production of the other

Question 30

The production possibilities curve shows:

A) the minimum production of one good for every possible production level of the other good.
B) how increasing the inputs used for one good increases the production of the other good.
C) the maximum production of one good for every possible production level of the other good.
D) how increasing the production of one good allows production of the other good to also rise.

Question 31

This graph describes the production possibilities on the island of Genovia:
Assuming efficient production,If 500 cars are produced in Genovia:

A) 50,000 tons of agricultural products are also being produced.
B) 25,000 tons of agricultural products are also being produced.
C) 45,000 tons of agricultural products are also being produced.
D) 40,000 tons of agricultural products are also being produced.

Question 32

In general,individuals and nations should specialize in producing those goods for which they have a(n):

A) absolute advantage.
B) comparative advantage.
C) absolutely comparative advantage.
D) absolute advantage and a comparative advantage.

Question 33

In general,individuals and nations should specialize in producing goods _________ other individuals or nations.

A) that they can produce more quickly than
B) that they can produce less quickly than
C) for which they have a lower opportunity cost compared to
D) for which they have a higher opportunity cost compared to

Question 34

An inefficient point on a production possibilities curve is:

A) necessarily also an attainable point.
B) not necessarily an attainable point.
C) necessarily an unattainable point.
D) possibly an unattainable point.

Question 35

The core principle that is illustrated by the production possibilities curve is:

A) the Scarcity Principle.
B) the Cost-Benefit Principle.
C) the Incentive Principle.
D) The Principle of Comparative Advantage.

Question 36

A country may have a comparative advantage in the production of cars if:

A) it imports most of the raw materials necessary to produce cars.
B) its citizens prefer driving cars to other forms of transportation.
C) it has strict environmental protection laws governing automobile emissions.
D) it has the natural resources needed to produce steel.

Question 37

If a point on a production possibilities curve is attainable:

A) it must be efficient.
B) it might or might not be efficient.
C) it is efficient only if it does not exhaust all currently available resources.
D) it must completely exhaust all currently available resources.

Question 38

The United States was unable to maintain its dominance in the production of televisions because:

A) the highly technical skills necessary to produce televisions are greater in other countries.
B) the raw materials necessary to build televisions became scarce in the United States.
C) the product designs evolved too rapidly for United States engineers to keep up.
D) automated production allowed production to be outsourced to countries with less-skilled workers.

Question 39

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

A) production possibilities curve.
B) consumption possibilities curve.
C) production function.
D) supply curve.

Question 40

The slope of the production possibilities curve must be:

A) positive.
B) decreasing.
C) increasing.
D) negative.

Question 41

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.By coordinating their production decisions,the maximum number of computers Smith and Jones can produce in an hour is:

A) 120.
B) 6.
C) 16.
D) 10.

Question 42

Points that lie below the production possibilities curve are inefficient because:

A) more of one or both goods could be produced using currently available resources without giving up production of another good.
B) producers are not specializing.
C) producers face scarcity.
D) too many goods are being produced.

Question 43

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.If Smith and Jones are dividing their time efficiently and producing more than 10 computers and fewer than 120 calculators per hour,Smith will __________ and Jones will __________.

A) produce only computers;produce only calculators
B) produce only computers;split his time between computers and calculators
C) split his time between computers and calculators;produce only computers
D) produce only calculators;produce only computers

Question 44

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.Suppose Smith and Jones begin by producing 0 computers and 220 calculators per hour.If they wish to produce 2 computers and 200 calculators per hour,then Smith will spend __________ and Jones will spend __________.

A) 30 minutes on each;30 minutes on each
B) 48 minutes on computers and 12 minutes on calculators;1 hour on calculators
C) 1 hour on calculators;10 minutes on computers and 50 minutes on calculators
D) 12 minutes on computers and 48 minutes on calculators;1 hour on calculators

Question 45

If a given production combination is known to be attainable,then it must be:

A) on the production possibilities curve.
B) an inefficient point.
C) an efficient point.
D) either an inefficient or efficient point.

Question 46

Generally,on a linear two-good production possibilities curve,the opportunity cost of the good measured on the vertical axis is:

A) one minus the opportunity cost of the good measured on the horizontal axis.
B) the reciprocal of the opportunity cost of the good measured on the horizontal axis.
C) the slope of the production possibilities line.
D) the negative of the opportunity cost of the good measured on the horizontal axis.

Question 47

In a two-person,two-good economy,the benefits of labor specialization will be larger when:

A) one person has an absolute advantage in both goods.
B) neither person has an absolute advantage.
C) there are small differences in the respective opportunity costs of the two individuals for both goods.
D) there are large differences in the respective opportunity costs of the two individuals for both goods.

Question 48

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.The opportunity cost of the 2^nd hour of playing the video game is:

A) 10 points on the test.
B) 5 points on the test.
C) 7 points on the test.
D) 2.5 points on the test.

Question 49

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos,and point B represents 3 coffees and 6 cappuccinos.Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis.
The opportunity cost of a cup of coffee is:

A) 3 cappuccinos
B) 9 cappuccinos
C) 1/3 of a cappuccino
D) 6 cappuccinos

Question 50

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.The intercept on the test score axis of Pat's PPC is:

A) 100
B) 92
C) 5 hours
D) 4 hours

Question 51

Working efficiently,Jordan can write 3 essays and outline 4 chapters each week.It must be true that:

A) 6 essays and 0 chapter outlines would be unattainable.
B) 2 essays and 3 chapter outlines would be efficient.
C) 3 essays and 5 chapter outlines would be unattainable.
D) 4 essays and 3 chapter outlines would be both attainable and efficient.

Question 52

If a given production combination is efficient,then it must be:

A) beyond the production possibilities curve.
B) on the production possibilities curve.
C) either an attainable or an unattainable point.
D) the best combination out of all possible combinations.

Question 53

If your linear,two-good production possibilities graph has a slope steeper than -1:

A) you would have to give up more than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis.
B) you would have to give up less than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis.
C) by specializing in the good measured on the horizontal axis you would be able to make more total units than you would if you specialized in the good measured on the vertical axis.
D) you have a comparative advantage in the good measured on the vertical axis.

Question 54

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.The opportunity cost of playing video games:

A) decreases the longer Pat plays.
B) increases the longer Pat plays.
C) is greater than the value of earning a higher grade on the test.
D) is equal to the value of earning a higher grade on the test.

Question 55

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.The opportunity cost of making an extra calculator for Smith is __________ and for Jones it is __________.

A) 0.10 computers;0.05 computers
B) 10 computers;6 computers
C) 1 computer;0.5 computers
D) 0.6 computers;1.2 computers

Question 56

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos,and point B represents 3 coffees and 6 cappuccinos.Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis.
The absolute value of the slope of the production possibilities curve between points A and B equals:

A) 6
B) 4
C) 3
D) 1/3

Question 57

According to the principle of increasing opportunity cost,expanding production requires using resources in which order?

A) In random order.
B) Starting with the resource with the highest opportunity cost and progressing to the lower opportunity cost resources.
C) Starting with the resource closest to the average opportunity cost,then progressing to higher opportunity cost resources.
D) Starting with the resource with the lowest opportunity cost and proceeding to the higher opportunity cost resources.

Question 58

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour.If they wish to produce 14 computers and 40 calculators per hour,then Smith will spend __________ and Jones will spend __________.

A) 1 hour on computers;40 minutes on computers and 20 minutes on calculators
B) 1 hour on computers;20 minutes on computers and 40 minutes on calculators
C) 30 minutes on each;30 minutes on each
D) 45 minutes on computers and 15 on calculators;1 hour on calculators

Question 59

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.Pat's PPC for test score versus hours playing a new video game is:

A) upward-sloping.
B) downward-sloping.
C) first upward- and then downward-sloping.
D) first downward- and then upward-sloping.

Question 60

The fundamental reason the production possibilities curve has a downward slope is:

A) workers are inefficient.
B) resources are of low quality.
C) resources are fixed and therefore tradeoffs must be made.
D) it has empirical support but why it is so is still a mystery.

Question 61

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Refer to the figure above.Moe's PPC is bowed out because:

A) he is better at physics than at economics.
B) his studying is subject to the principle of increasing opportunity costs.
C) he is better at economics than at physics.
D) he has failed to take advantage of his comparative advantage.

Question 62

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
By taking the first tons from ______,Earth Movers & Shakers is producing consistent with the _____ Principle.

A) Mother Lode;Low Hanging Fruit
B) Middle Drift;Compromise
C) Middle Drift;Low Hanging Fruit
D) Scraping Bottom;Cost Minimizing

Question 63

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Refer to the figure above.According to Moe's PPF,moving from a grade of 80 in economics to a grade of 90 in economics:

A) is inefficient.
B) comes at a lower opportunity cost than moving from a 90 to a 100 in economics.
C) is not feasible.
D) comes at a higher opportunity cost than moving from a 90 to a 100 in economics.

Question 64

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.Suppose Smith and Jones begin by producing 100 calculators per hour;as Smith and Jones choose to efficiently produce fewer computers and more calculators,__________ devotes more time to calculators because his __________.

A) Smith;absolute advantage is larger
B) Jones;absolute advantage is smaller
C) Jones;opportunity costs are lower
D) Smith;opportunity costs are lower

Question 65

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Refer to the figure above.Which of the following is evidence that the low-hanging fruit principle applies to Moe's study habits?

A) Earning the first 65 points in economics has a lower opportunity cost than earning the ten points that moves his score from 90 to 100 in economics.
B) Physics is easier to grasp than economics,so it is the "low-hanging fruit" for Moe.
C) Economics is easier to grasp than physics,so it is the "low-hanging fruit" for Moe.
D) The low-hanging fruit principle applies only to production of goods and services,not to grades.

Question 66

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Refer to the figure above.If Moe moved from Point A to Point C,his grade in Physics would go down by ______________ his grade in economics.

A) less than the increase in
B) more than the increase in
C) more than the decrease in
D) less than the decrease in

Question 67

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
Refer to the table above.The daily opportunity cost of moving one miner from Mother Lode to Scraping Bottom is:

A) 2 tons.
B) 3 tons.
C) 4 tons.
D) 1 ton.

Question 68

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}\underline{\text { Good }} & \underline{\text { Smith }} & \underline{\text { Jones } }\\\text { Computers } & 10 & 6 \\\text { Calculators } & 100 & 120\end{array}$
Refer to the table above.If Smith and Jones are dividing their time efficiently and producing fewer than 10 computers and more than 120 calculators per hour,Smith will __________ and Jones will __________.

A) split his time between the two;produce only calculators
B) split his time between the two;split his time between the two
C) produce only calculators;produce only computers
D) produce only computers;produce only calculators

Question 69

The benefits of specialization can be used to explain why:

A) workers prefer to work on a variety of tasks during the day.
B) machines are more productive than human workers.
C) trade can make both parties to the trade better off.
D) big companies take advantage of smaller ones.

Question 70

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
Refer to the table above.The daily opportunity cost of moving one miner from Scraping Bottom to Middle Drift is:

A) less than 0.
B) 3 tons.
C) 4 tons.
D) 5 tons.

Question 71

The Principle of Increasing Opportunity Costs implies that:

A) productive people do the hardest tasks first,while they are fresh.
B) to increase production,you should use the resources with the lowest opportunity cost first.
C) the cost-benefit principle does not apply to increasing productivity.
D) specialization increases productivity.

Question 72

Economic growth can result from a(n):

A) increase in the amount of productive resources.
B) increase in number of the minimum wage jobs.
C) increase in the amount of consumer goods produced.
D) decrease in the number of workers available.

Question 73

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
Refer to the table above.Earth Movers & Shakers needs to fill an order for 100 tons of ore in a single day,and has no other orders to fill that day.It should:

A) take it all from Mother Lode.
B) take 75 tons from Middle Drift and 25 tons from Mother Lode.
C) take 75 tons from Middle Drift and 25 tons from Scraping Bottom.
D) take 30 tons from Scraping Bottom and 70 tons from Mother Lode.

Question 74

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Refer to the figure above.Both of Moe's professors require at least a 65 to pass and a 90 to earn an A.After looking at his PPC,Moe realizes that:

A) he can pass both classes.
B) he can pass economics,but only if he fails physics.
C) he can pass physics,but only if he fails economics.
D) he could earn an A in economics and still pass physics.

Question 75

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.
Moe needs to earn at least an 80 in both economics and physics to keep his scholarship.Given his current PPC,an 80 in both classes is ______.

A) infeasible
B) attainable,but only if Moe is efficient
C) efficient
D) attainable,but inefficient

Question 76

The principle of comparative advantage states that specialization increases productivity,but the principle of increasing opportunity costs states that,when you increase production of a single good,you must use increasingly costly resources.These two principles:

A) are evidence that economic theory is internally inconsistent.
B) are an example of the difference between abstract models and the real world.
C) cannot be true at the same time.
D) together account for the outward bow shape of production possibility curves.

Question 77

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
Refer to the table above.The opportunity cost of moving one miner from Middle Drift to Mother Lode is:

A) 1 ton.
B) 3 tons.
C) 4 tons.
D) 5 tons.

Question 78

You have noticed that your next-door neighbor,Mary,always works in the garden and her husband,Joe,always walks the dog.Based on this observation,you conclude that:

A) Mary has an absolute advantage in gardening.
B) Joe has a comparative advantage in walking the dog.
C) Mary does not understand the principle of low-hanging fruit.
D) Joe experiences increasing opportunity costs when he gardens,but not when he walks the dog.

Question 79

Production possibilities curves for large economies generally have an outward bow shape because:

A) specialization gives some producers a comparative advantage.
B) opportunity costs tend to decrease with increases in production.
C) opportunity costs tend to increase with increases in production.
D) as more resources are used to produce the same good,those resources become less and less expensive.

Question 80

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } \hline \text { Mine } & \text { Tons } & \begin{array} { l } \text { Number of } \\\text { Miners }\end{array} \\\hline \text { Mother Lode } & 100 & 25 \\\hline \text { Scraping Bottom } & 30 & 10 \\\hline \text { Middle Drift } & 75 & 15 \\\hline\end{array}$$
Refer to the table above.Earth Movers & Shakers has just received an order for 60 tons of ore,to be filled in a single day.It has no other orders for that day.It should:

A) take it all from Mother Lode.
B) take it all from Middle Drift.
C) take 30 tons from Scraping Bottom and 30 tons from Middle Drift.
D) take 20 tons from each of the three mines.