Question 1

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas. Which of the following is true?
A) Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth.
B) Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe.
C) Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth.
D) Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe.

Accepted Answer

Beth should produce pizza because her opportunity cost of producing one pizza is 1.33 sandwiches (12/9), which is lower than Joe's opportunity cost of 2 sandwiches (10/5).

Question 2

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of
A) bread, while Bob has a comparative advantage in the production of butter.
B) bread and neither has a comparative advantage in the production of butter.
C) butter, while Bob has a comparative advantage in the production of bread.
D) both bread and butter.

Accepted Answer

Comparative advantage refers to the ability of a producer to produce a good or service at a lower opportunity cost than another producer. In this case, Andy can produce 3 loaves of bread in the time it would take him to produce 1 pound of butter (24 loaves/8 pounds). On the other hand, Bob can produce only 1 loaf of bread in the time it would take him to produce 1 pound of butter (8 loaves/8 pounds). Therefore, Andy has a comparative advantage in the production of bread, while Bob has a comparative advantage in the production of butter.

Question 3

Betty and Ann live on a desert island. With a dayʹs labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Annʹs opportunity cost of producing 1 coconut is and she should specialize in the production of_____________.
A) 2 fish per coconut; coconuts
B) 6 fish per coconut; coconuts
C) 0 fish per coconut; coconuts
D) 8 fish per coconut; fish

Accepted Answer

Ann's opportunity cost of producing 1 coconut is 2 fish (since she gives up 8 fish to produce 4 coconuts). She should specialize in coconuts because she has a lower opportunity cost for coconuts compared to Betty.

Question 4

Blue Violet's$\quad$$\quad$$\quad$  Orange Rose's production possibilities production possibilities
$\begin{array}{|llll|}
\hline \begin{array}{l}
\text { Teapots } \
\text { (number }
\end{array} & \begin{array}{l}
\text { Coffee pots } \
\text { (number }
\end{array} & \begin{array}{l}
\text { Teapots } \
\text { (number }
\end{array}& \begin{array}{l}
\text { Coffee pots } \
\text { (number }
\end{array} \
\text { perweek) } & \text { perweek) } & \text { perweek) }& \text { perweek) }\
\hline 150&\&0&75&\&75\
\hline 100&\&25&50&\&50\
\hline 50&\&50&25&\&100\
\hline 0&\&75&0&\&150\
\hline 
\end{array}$

-Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities._____________ has a comparative advantage in teapots and _________has a comparative advantage in coffeepots.
A) Orange Rose; Blue Violet
B) Orange Rose; Orange Rose
C) Blue Violet; Blue Violet
D) Blue Violet; Orange Rose

Accepted Answer

Blue Violet has a comparative advantage in teapots because it can produce more teapots than Orange Rose for any given amount of coffee pots. Orange Rose has a comparative advantage in coffee pots because it can produce more coffee pots than Blue Violet for any given amount of teapots.

Question 5

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which of the following should be the managerʹs choice?
A) David will make pizza because he has comparative advantage in making pizza.
B) John and David both will spend half their time making pizza and half their time making pasta because each has a comparative advantage in making pizza.
C) John will make pizza because he has comparative advantage in making pizza.
D) Fire David because he is not as productive as John. John will do both jobs.

Accepted Answer

The answer of The kitchen manager at an Italian restaurant...

Question 6

An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Maryʹs opportunity cost of producing 1 unit of shelter is 2 units of food. Billʹs opportunity cost of producing 1 unit of shelter is 4 units of food.
A) Mary has a comparative advantage over Bill in the production of shelter.
B) Mary has a comparative advantage over Bill in the production of food.
C) Bill has an absolute advantage over Mary in the production of shelter.
D) Bill has a comparative advantage over Mary in the production of shelter.

Accepted Answer

Mary's opportunity cost of producing shelter is lower than Bill's, meaning she has a comparative advantage in producing shelter. This does not necessarily mean she has a comparative advantage in producing food, as this information is not provided. Bill may have an absolute advantage in producing shelter, but this is not relevant to comparative advantage.

Question 7

In an hour, Andy can make either 5 pizzas or 12 pies and Chris can make either 6 pizzas or 18 pies.____________advantage in making pizzas.
A) Andy has a comparative
B) Chris has a comparative
C) Andy has an absolute
D) None of the above answers is correct.

Accepted Answer

Andy can make 5 pizzas in an hour, while Chris can make 6 pizzas in an hour. Therefore, Andy has a comparative advantage in making pizzas.

Question 8

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is
A) 1/2 pizza.
B) 5 pizzas.
C) 2 pizzas.
D) 1 pizza.

Accepted Answer

The opportunity cost of producing one sandwich is the amount of pizza Joe could have made instead. Since Joe can make 5 pizzas in an hour, the opportunity cost of one sandwich is 1/2 pizza (5 pizzas/10 sandwiches).

Question 9

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if
A) Jerry trades sandwiches in exchange for eggs.
B) Tom trades sandwiches in exchange for eggs.
C) they trade, no matter who trades sandwiches and who eggs.
D) they donʹt trade.

Accepted Answer

The answer of Tom takes 20 minutes to cook an...

Question 10

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes that
A) Beth should produce both goods and Joe should produce sandwiches.
B) Beth should produce sandwiches and Joe should produce pizza.
C) Beth should produce both goods because she can produce more of both goods in an hour than can Joe.
D) Beth should produce pizza and Joe should produce sandwiches.

Accepted Answer

To determine who has the comparative advantage in producing a particular good, we need to compare the opportunity cost of producing that good. One way to think about opportunity cost is to consider how much of one good must be given up to produce an additional unit of another good.

In this case, we can see that Joe can produce 2 sandwiches for every pizza he produces (20/10), while Beth can produce 4 sandwiches for every 3 pizzas she produces (36/27). This means that Joe's opportunity cost of producing a pizza is 2 sandwiches, while Beth's opportunity cost is only 4/3 sandwiches.

Since Beth has a lower opportunity cost of producing pizza, she has the comparative advantage in pizza production. Similarly, Joe has a lower opportunity cost of producing sandwiches (1/2 pizza) compared to Beth (3/4 pizza), so he has the comparative advantage in sandwich production.

Therefore, the best choice is for Beth to produce pizza and for Joe to produce sandwiches.

Question 11

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in______________ and Jerry has a comparative advantage in__________ .
A) making sandwiches; cooking eggs
B) cooking eggs; making sandwiches
C) neither of these activities; both activities
D) both activities; neither of these activities

Accepted Answer

Comparative advantage refers to the ability of a person, firm or country to produce a particular good or service at a lower opportunity cost than another. To determine who has a comparative advantage, we compare how much time each person takes to produce each good/service.

From the question, Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich while Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. To determine who has a comparative advantage in cooking eggs, we compare the time taken by each. It can be observed that Tom takes more time (20 minutes) to cook an egg compared to Jerry (15 minutes). Therefore, Jerry has a comparative advantage in cooking eggs. To determine who has a comparative advantage in making sandwiches, we compare the time taken by each. It can be observed that Tom takes less time (5 minutes) to make a sandwich compared to Jerry (3 minutes). Therefore, Tom has a comparative advantage in making sandwiches. Hence, the answer is B.

Question 12

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice should specialize in the production of
A) bookshelves.
B) shoes.
C) either shoes or bookshelves.
D) neither shoes nor bookshelves.

Accepted Answer

Alice should specialize in the production of bookshelves because she has a lower opportunity cost for producing bookshelves compared to shoes. She gives up fewer shoes per bookshelf than Roger does.

Question 13

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry trade
A) Tom will benefit and Jerry will not.
B) Jerry will benefit and Tom will not.
C) both will benefit.
D) none of them will benefit.

Accepted Answer

By trading, Tom can make a sandwich while Jerry cooks an egg, reducing the total time needed to make both items. Similarly, Jerry can make a sandwich while Tom cooks an egg. This way, both can save time and benefit from the trade.

Question 14

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice has _______advantage in producing__________ .
A) an absolute; bookshelves
B) a comparative; bookshelves
C) a comparative; shoes
D) an absolute; shoes

Accepted Answer

Alice has a comparative advantage in producing bookshelves because she gives up fewer pairs of shoes per bookshelf compared to Roger.

Question 15

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct?
A) Homer has a comparative advantage in both catching fish and picking fruit.
B) Teddy has a comparative advantage in both catching fish and picking fruit.
C) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish.
D) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.

Accepted Answer

Homer has a lower opportunity cost of catching fish (1 fruit foregone for 1.5 fish caught) compared to Teddy (3 fruits foregone for 1 fish caught), while Teddy has a lower opportunity cost of picking fruit (0.33 fish foregone for 1 fruit picked) compared to Homer (1.5 fish foregone for 1 fruit picked). Therefore, Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.

Question 16

Betty and Ann live on a desert island. With a dayʹs labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Bettyʹs opportunity cost of producing 1 fish is_____________ , and she should specialize in the production of___________ .
A) 2/3 coconut per fish; coconuts
B) 1 coconut per fish; fish
C) 1/3 coconut per fish; fish
D) 4 coconuts per fish; fish

Accepted Answer

The answer of Betty and Ann live on a desert...

Question 17

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?
A) Beta
B) Gamma
C) Neither country has a comparative advantage.
D) Both countries have the comparative advantage.

Accepted Answer

Country Gamma has a lower opportunity cost of producing one ton of wheat as compared to Country Beta. Therefore, Country Gamma has a comparative advantage in the production of wheat.

Question 18

Blue Violet's$\quad$$\quad$$\quad$  Orange Rose's production possibilities production possibilities
$\begin{array}{|llll|}
\hline \begin{array}{l}
\text { Teapots } \
\text { (number }
\end{array} & \begin{array}{l}
\text { Coffee pots } \
\text { (number }
\end{array} & \begin{array}{l}
\text { Teapots } \
\text { (number }
\end{array}& \begin{array}{l}
\text { Coffee pots } \
\text { (number }
\end{array} \
\text { perweek) } & \text { perweek) } & \text { perweek) }& \text { perweek) }\
\hline 150&\&0&75&\&75\
\hline 100&\&25&50&\&50\
\hline 50&\&50&25&\&100\
\hline 0&\&75&0&\&150\
\hline 
\end{array}$

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.
A) Blue Violet has a comparative advantage in teapots.
B) Both have a comparative advantage in teapots.
C) Sweet Pansy has a comparative advantage in teapots.
D) Sweet Pansy has an absolute advantage in teapots.

Accepted Answer

Blue Violet has a lower opportunity cost for producing teapots compared to Sweet Pansy, indicating a comparative advantage in teapots.

Question 19

Country A can produce 1 cello by giving up the production of 5 guitars. Country B can produce 1 guitar by giving up the production of 4 cellos. In which good does country A have a comparative advantage?
A) guitars
B) cellos
C) both goods
D) neither good

Accepted Answer

Country A has a comparative advantage in guitars because it has a lower opportunity cost (1/5 of a cello per guitar) compared to Country B's opportunity cost for producing guitars (4 cellos per guitar).

Question 20

Which of the following describes comparative advantage?
A) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day.
B) Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4.
C) Jane can type 50 words per minute and Joe can type 60 words per minute.
D) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.

Accepted Answer

Comparative advantage is the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than others. In this case, Farmer John has a lower opportunity cost of producing wheat than Farmer Ben (2 bushels of corn compared to 3 bushels of corn), so Farmer John has a comparative advantage in producing wheat.

Quiz 2: The Economic Problem

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas. Which of the following is true?

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of

Betty and Ann live on a desert island. With a dayʹs labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Annʹs opportunity cost of producing 1 coconut is and she should specialize in the production of_____________.

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which of the following should be the managerʹs choice?

An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Maryʹs opportunity cost of producing 1 unit of shelter is 2 units of food. Billʹs opportunity cost of producing 1 unit of shelter is 4 units of food.

In an hour, Andy can make either 5 pizzas or 12 pies and Chris can make either 6 pizzas or 18 pies.____________advantage in making pizzas.

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes that

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in____ and Jerry has a comparative advantage in .

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice should specialize in the production of

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry trade

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice has _advantage in producing____ .

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct?

Betty and Ann live on a desert island. With a dayʹs labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Bettyʹs opportunity cost of producing 1 fish is___ , and she should specialize in the production of_ .

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

Country A can produce 1 cello by giving up the production of 5 guitars. Country B can produce 1 guitar by giving up the production of 4 cellos. In which good does country A have a comparative advantage?

Which of the following describes comparative advantage?