Question 1

Suppose it takes Paul 3 hours to bake a cake and 2 hours to move the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn.Which of the following statements is correct?
A)Paul has the absolute advantage in baking cakes
B)Paul has the comparative in mowing the lawn
C)Paul has the comparative in baking cakes
D)Paul has the absolute advantage in mowing the lawn.

Accepted Answer

To determine who has the absolute advantage, we compare the time it takes each person to complete a task. Paul takes 3 hours to bake a cake while Tom takes only 2 hours. Therefore, Tom has the absolute advantage in baking cakes. However, Paul only takes 2 hours to mow the lawn while Tom takes 1 hour. Therefore, Paul has the absolute advantage in mowing the lawn.

To determine who has the comparative advantage, we compare the opportunity cost of producing one good versus the other. Paul can either bake a cake or move the lawn. His opportunity cost of baking a cake is 1.5 hours of moving the lawn (since he could have spent that time mowing the lawn instead), while his opportunity cost of moving the lawn is 2/3 of a cake (since he could have baked that much cake in the time it takes to move the lawn). Therefore, Paul has the comparative advantage in baking cakes (since his opportunity cost of baking a cake is lower than Tom's) and Tom has the comparative advantage in mowing the lawn (since his opportunity cost of mowing the lawn is lower than Paul's).

Question 2

If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ______ has a(n) ______ advantage in producing shoes.
A)Jane; absolute
B)Jane; comparative
C)Bob; absolute
D)Bob; comparative

Accepted Answer

Absolute advantage means being able to produce more in a given time period.

Question 3

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:
A)Les has a comparative advantage in producing pants.
B)Les has an absolute advantage in producing pants.
C)Eva has a comparative advantage in producing pants.
D)Les has both comparative and absolute advantage in producing pants.

Accepted Answer

Les can produce more pairs of pants per hour than Eva, meaning he has an absolute advantage in producing pants. Comparative advantage would only be relevant if one of them had a lower opportunity cost in producing pants than the other, which is not mentioned in the given information.

Question 4

Refer to the table below.Julia's opportunity cost of making a cake is: 
A)60 cakes
B)6 cakes
C)6/5 of a cake
D)5/6 of a cake

Accepted Answer

The answer of Refer to the table below.Julia's opportunity cost...

Question 5

Refer to the table below.According to the table, Martha has the absolute advantage in: 
A)pies.
B)neither pies nor cakes.
C)cakes.
D)both pies and cakes.

Accepted Answer

The answer of Refer to the table below.According to the...

Question 6

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.Which of the following statements is correct?
A)Dan has the comparative advantage in smoothies, but Tracy has the absolute advantage in smoothies.
B)Dan has the comparative and absolute advantage in sandwiches.
C)Dan has the comparative and absolute advantage in smoothies.
D)Dan has the comparative advantage in sandwiches, but Tracy has the absolute advantage in sandwiches.

Accepted Answer

For Dan, in the time it takes him to make a sandwich, he could make 1/3 of a smoothie, and in the time it takes him to make a smoothie, he could make 3 sandwiches. For Tracy, in the time it takes her to make a sandwich, she could make 1/2 of a smoothie, and in the time it takes her to make a smoothie she could make 2 sandwiches. So, Dan has the comparative advantage in sandwiches (because 1/3 < 1/2)and Tracy has the comparative advantage in smoothies (because 2 < 3). Also, because Dan can make a sandwich more quickly than Tracy, he has the absolute advantage in sandwiches, and because Tracy can make a smoothie more quickly than Dan, she has the absolute advantage in smoothies.

Question 7

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.
A)comparative advantage
B)absolute advantage
C)comparative advantage and an absolute advantage
D)absolute advantage and possibly a comparative advantage.

Accepted Answer

Comparative advantage means having a lower opportunity cost. Absolute advantage means being able to produce more in a given time period.

Question 8

If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers.
A)comparative
B)absolute
C)relative
D)natural

Accepted Answer

An absolute advantage refers to when a country can produce a certain good or service more efficiently than another country. The question states that this particular nation can produce more computers per year than any other nation, indicating that it has an absolute advantage in the production of computers.

Question 9

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.What is the opportunity cost to Dan of making a sandwich?
A)1/3 of a smoothie
B)3 smoothies
C)15 smoothies
D)5 smoothies

Accepted Answer

The opportunity cost of making a sandwich is the benefit Dan gives up by not making a smoothie. In this case, the time it takes Dan to make a sandwich is 5 minutes, and in that time he could have made 1/3 of a smoothie (15 minutes divided by 3). Therefore, the answer is A.

For the second part of the question, there is not enough information provided to determine the best choice(s).

Question 10

An individual has an absolute advantage in producing pizzas if that individual:
A)has a lower opportunity cost of producing pizzas than anyone else.
B)can produce more pizzas in a given amount of time than anyone else.
C)has a higher opportunity cost of producing pizzas than anyone else.
D)charges the lowest price for pizzas.

Accepted Answer

Absolute advantage refers to the ability to produce a good or service using fewer resources (including time) than another producer. Therefore, the individual who can produce more pizzas in a given amount of time than anyone else would have an absolute advantage in producing pizzas.

Question 11

Suppose Cathy and Lewis work in a bakery making pies and cakes.Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake.Which of the following statements is correct?
A)Cathy has a comparative advantage in pies, and Lewis has an absolute advantage in pies.
B)Cathy has a comparative and absolute advantage in pies.
C)Lewis has a comparative and absolute advantage in pies.
D)Lewis has a comparative advantage in pies, and Cathy has an absolute advantage in pies.

Accepted Answer

To determine comparative advantage, we need to compare the opportunity cost of producing one unit of each good between the two producers. The opportunity cost is the amount of the other good that could have been produced with the time spent making one unit of a good.

For Cathy, the opportunity cost of making a pie is 1 hour of cake production (since she can make a cake in 1 hour) and the opportunity cost of making a cake is 1.5 hours of pie production.

For Lewis, the opportunity cost of making a pie is 1.5 hours of cake production and the opportunity cost of making a cake is 2 hours of pie production.

Since the opportunity cost of making a pie (in terms of lost cake production) is lower for Lewis, he has a comparative advantage in pie production. Similarly, since the opportunity cost of making a cake (in terms of lost pie production) is lower for Cathy, she has a comparative advantage in cake production.

However, when it comes to absolute advantage (the ability to produce more of a good using the same resources), it is clear that Cathy can produce more pies in the same amount of time than Lewis, so she has an absolute advantage in pie production.

Question 12

Refer to the table below.Martha's opportunity cost of making of a pie is: 
A)3/4 of a cake.
B)4/3 of a cake.
C)8 cakes.
D)80 cakes.

Accepted Answer

The answer of Refer to the table below.Martha's opportunity cost...

Question 13

If Al has an absolute advantage over Beth in preparing meals, then:
A)it takes Al more time to prepare a meal than Beth.
B)the problem of scarcity applies to Beth but not to Al.
C)Al's opportunity cost of preparing a meal is lower than is Beth's.
D)Al can prepare more meals in a given time period than Beth.

Accepted Answer

Absolute advantage means being able to produce more in a given time period.

Question 14

Refer to the table below.Martha's opportunity cost of making a cake is: 
A)3/4 of a pie.
B)4/3 of a pie.
C)6 pies.
D)60 pies.

Accepted Answer

The answer of Refer to the table below.Martha's opportunity cost...

Question 15

Refer to the table below.According to the table, Julia has the absolute advantage in: 
A)pies.
B)neither pies nor cakes.
C)cakes.
D)both pies and cakes.

Accepted Answer

The answer of Refer to the table below.According to the...

Question 16

Refer to the table below.Based on their comparative advantage, Martha should specialize in _______ while Julia should specialize in _______. 
A)pies; cakes
B)cakes; pies
C)neither pies nor cakes; both pies and cakes
D)both pies and cakes; neither pies nor cakes

Accepted Answer

The answer of Refer to the table below.Based on their...

Question 17

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.Which of the following statements is correct?
A)Tracy should specialize in sandwiches and smoothies.
B)Dan should specialize in smoothies, and Tracy should specialize in sandwiches.
C)Dan should specialize in sandwiches, and Tracy should specialize in smoothies.
D)Dan should specialize in both sandwiches and smoothies.

Accepted Answer

To find the best choice, we need to compare the time each person takes to make each item. Dan takes less time to make a sandwich (5 minutes) compared to Tracy (6 minutes), and Tracy takes less time to make a smoothie (12 minutes) compared to Dan (15 minutes). Therefore, Dan should specialize in making smoothies, and Tracy should specialize in making sandwiches. This way, they will be able to minimize their time and work efficiently. Thus, option B is the correct answer.

Question 18

Refer to the table above.______ has the comparative advantage in making pies and ______ the comparative advantage in making cakes. 
A)Martha; Martha
B)Julia; Julia
C)Martha; Julia
D)Julia; Martha

Accepted Answer

The answer of Refer to the table above.______ has the...

Question 19

Larry has a comparative advantage over his classmates in writing term papers if he:
A)can write term papers faster than his classmates.
B)has an absolute advantage in writing term papers.
C)always earns an A on his term papers.
D)has a lower opportunity cost of writing term papers than his classmates.

Accepted Answer

Comparative advantage is the ability to produce a good or service at a lower opportunity cost than others. So, if Larry has a lower opportunity cost of writing term papers than his classmates, he has a comparative advantage in writing term papers. The other options, such as writing papers faster or always earning an A, do not necessarily indicate a lower opportunity cost.

Question 20

Which of the following statements is 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.

Accepted Answer

Comparative advantage is the ability of a country or firm to produce a good or service at a lower opportunity cost than another country or firm. It does not require that a country or firm have an absolute advantage (the ability to produce more output with the same input). In fact, it is possible for a country or firm to have a comparative advantage in a good or service even if it has an absolute disadvantage in producing it.

Quiz 2: Comparative Advantage

Suppose it takes Paul 3 hours to bake a cake and 2 hours to move the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn.Which of the following statements is correct?

If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then has a(n) advantage in producing shoes.

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:

Refer to the table below.Julia's opportunity cost of making a cake is:

Refer to the table below.According to the table, Martha has the absolute advantage in:

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.Which of the following statements is correct?

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers.

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.What is the opportunity cost to Dan of making a sandwich?

An individual has an absolute advantage in producing pizzas if that individual:

Suppose Cathy and Lewis work in a bakery making pies and cakes.Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake.Which of the following statements is correct?

Refer to the table below.Martha's opportunity cost of making of a pie is:

If Al has an absolute advantage over Beth in preparing meals, then:

Refer to the table below.Martha's opportunity cost of making a cake is:

Refer to the table below.According to the table, Julia has the absolute advantage in:

Refer to the table below.Based on their comparative advantage, Martha should specialize in _ while Julia should specialize in _.

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie.Which of the following statements is correct?

Refer to the table above. has the comparative advantage in making pies and the comparative advantage in making cakes.

Larry has a comparative advantage over his classmates in writing term papers if he:

Which of the following statements is true?