Question 1

Use the production possibilities data below to answer the following question(s).
Table 2-3
 Refer to Table 2-3. The farmer and the rancher both could benefit if the farmer were to specialize in

Accepted Answer

By specializing in potatoes, the farmer can produce 300 pounds of potatoes and no meat. By specializing in meat, the rancher can produce 200 pounds of meat and no potatoes. This combination allows for both farmers to produce more than if they split their production between both goods, and they can then trade with each other to obtain the goods they do not produce. Therefore, the farmer specializing in potatoes and the rancher specializing in meat would result in the greatest benefit for both parties.

Question 2

Figure 2-2 
Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB in Figure 2-2?

Accepted Answer

A major technological advance would increase the productivity of producing both breadfruit and fish, allowing for the production possibilities curve to shift outward from AA to BB. A decrease in the labor force (choice A) or capital stock (choice D) would decrease productivity, shifting the curve inward. A sudden change in consumer preferences (choice B) would not affect the production capabilities of the country, but would influence the allocation of resources within the given production possibilities curve.

Question 3

Figure 2-3 
Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Accepted Answer

Economy B is likely to grow more rapidly in the future because it has a higher level of investment, which helps to drive economic growth. Consumption alone does not drive economic growth, so economy A may not be able to sustain high levels of growth without an increase in investment as well.

Question 4

Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Ann eight hours to type a paper or two hours to mow the lawn. Which of the following is true?

Accepted Answer

Comparative advantage refers to the ability to produce a good or service at a lower opportunity cost than another producer. In this scenario, your opportunity cost of typing a paper is four hours of lawn mowing (the time it would take you to mow the lawn), while Ann's opportunity cost of typing a paper is eight hours of lawn mowing (the time it would take her to mow the lawn). Therefore, you have a comparative advantage in typing, as your opportunity cost of typing is lower than Ann's.

Question 5

If Shawn can produce donuts at a lower opportunity cost than Sue, then

Accepted Answer

According to the definition of comparative advantage, if one producer can produce a good at a lower opportunity cost than another producer, then that producer has a comparative advantage in the production of that good. Therefore, if Shawn can produce donuts at a lower opportunity cost than Sue, then he has a comparative advantage in the production of donuts.

Question 6

If Kim can either wash 10 cars or wax 2 cars during a day, and Vince can either wash 17 cars or wax 2 cars during a day, then according to the law of comparative advantage,

Accepted Answer

Kim's opportunity cost of waxing a car is 10 cars (10 cars / 2 cars), while Vince's opportunity cost of waxing a car is 17 cars (17 cars / 2 cars). Therefore, Vince's opportunity cost of waxing a car is less than Kim's. If Kim specializes in waxing and Vince specializes in washing, then their total output can be expanded because Kim can wax more cars than Vince can wash, and Vince can wash more cars than Kim can wax.

Question 7

Suppose you can type a paper in two hours or mow the lawn in four hours. It takes your friend Ann eight hours to type a paper of the same length and five hours to mow the same size of lawn. Which of the following is true?

Accepted Answer

You have a comparative advantage in typing papers because you can do it faster than Ann, while Ann has a comparative advantage in mowing lawns because her opportunity cost of mowing is lower than yours. By specializing in their respective areas of comparative advantage, both can benefit from trade.

Question 8

Figure 2-4 
Which of the following is true of Figure 2-4?

Accepted Answer

Point B represents a situation where the economy is producing at its maximum potential for food but is not producing as much clothing as it could. This means that in order to produce more clothing, the economy would have to give up some food production. Therefore, point B represents a situation of opportunity cost and trade-offs, where the economy has to make a choice between producing more food or clothing. Point A, on the other hand, represents a situation where the economy is not fully utilizing its resources and could produce more of both food and clothing. Therefore, choice A is incorrect. Choice C is also incorrect because point A represents a situation of underutilization of resources, not efficient use. Similarly, choice D is incorrect because point B represents a situation of trade-offs and opportunity cost, not inefficiency.

Question 9

Figure 2-6 
Which of the following will most likely shift the production possibilities curve for breadfruit and fish outward from AA to BB in Figure 2-6?

Accepted Answer

An improvement in the form of economic organization can lead to increased productivity, efficiency, and innovation, which can in turn lead to an outward shift in the production possibilities curve for breadfruit and fish.

Question 10

Sean can build sandboxes twice as fast as Matt. Sean can assemble swing sets three times as fast as Matt. The law of comparative advantage suggests that

Accepted Answer

The law of comparative advantage suggests that both parties can gain by specializing in the task where they have a relative efficiency advantage. Sean is more efficient at assembling swing sets, and Matt is relatively better at building sandboxes compared to Sean's efficiency in swing sets.

Question 11

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

Accepted Answer

Comparative advantage arises when one individual has a lower opportunity cost of producing a good or service than the other individual. If both individuals have the same opportunity costs for producing both goods or services, then neither individual would have a comparative advantage in either activity.

Question 12

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Accepted Answer

Shawn has an absolute advantage because he can produce more donuts in a day than Sue. Comparative advantage depends on opportunity costs, which are not provided here.

Question 13

Figure 2-8 
Points A , B , and C in Figure 2-8 indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Accepted Answer

Economy C is likely to grow more rapidly in the future because it has the highest investment rate, which leads to increased production and potential for economic growth.

Question 14

Figure 2-9 
Refer to Figure 2-9. If the economy moves from point A to point D, the opportunity cost is

Accepted Answer

The answer of Figure 2-9 
Refer to Figure 2-9. If...

Question 15

Use the production possibilities data below to answer the following question(s).
Table 2-3

Refer to Table 2-3. The rancher has a comparative advantage in

Accepted Answer

The rancher is able to produce 2 units of meat for every unit of potatoes, while the farmer can only produce 1.5 units of meat for every unit of potatoes. Therefore, the rancher has a lower opportunity cost for producing meat and has a comparative advantage in producing meat, while the farmer has a lower opportunity cost for producing potatoes and has a comparative advantage in producing potatoes.

Question 16

If Kim can wash 10 cars or wax 2 cars during a day, and Susan can wash 8 cars or wax 2 cars during a day, then according to the law of comparative advantage,

Accepted Answer

Kim has a lower opportunity cost for washing cars, and Susan has a lower opportunity cost for waxing cars, so they should specialize accordingly to maximize total output.

Question 17

Figure 2-5 
In Figure 2-5, which of the following is true?

Accepted Answer

The answer of Figure 2-5 
In Figure 2-5, which of...

Question 18

Use the production possibilities data below to answer the following question(s).
Table 2-3

Refer to Table 2-3. The opportunity cost of 1 pound of potatoes for the rancher is

Accepted Answer

According to the table, the rancher has to give up producing 5/4 pounds of meat in order to produce 1 pound of potatoes. This means that the opportunity cost of 1 pound of potatoes for the rancher is 5/4 pounds of meat. Therefore, the best choice is C.

Question 19

Figure 2-7 
If an economy operates at point A on the production possibilities curve shown in Figure 2-7,

Accepted Answer

The answer of Figure 2-7 
If an economy operates at...

Question 20

Figure 2-1 
In Figure 2-1, point A is

Accepted Answer

The answer of Figure 2-1 
In Figure 2-1, point A...

Quiz 2: Some Tools of the Economist

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The farmer and the rancher both could benefit if the farmer were to specialize in

Figure 2-2 Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB in Figure 2-2?

Figure 2-3 Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Ann eight hours to type a paper or two hours to mow the lawn. Which of the following is true?

If Shawn can produce donuts at a lower opportunity cost than Sue, then

If Kim can either wash 10 cars or wax 2 cars during a day, and Vince can either wash 17 cars or wax 2 cars during a day, then according to the law of comparative advantage,

Suppose you can type a paper in two hours or mow the lawn in four hours. It takes your friend Ann eight hours to type a paper of the same length and five hours to mow the same size of lawn. Which of the following is true?

Figure 2-4 Which of the following is true of Figure 2-4?

Figure 2-6 Which of the following will most likely shift the production possibilities curve for breadfruit and fish outward from AA to BB in Figure 2-6?

Sean can build sandboxes twice as fast as Matt. Sean can assemble swing sets three times as fast as Matt. The law of comparative advantage suggests that

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Figure 2-8 Points A , B , and C in Figure 2-8 indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Figure 2-9 Refer to Figure 2-9. If the economy moves from point A to point D, the opportunity cost is

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The rancher has a comparative advantage in

If Kim can wash 10 cars or wax 2 cars during a day, and Susan can wash 8 cars or wax 2 cars during a day, then according to the law of comparative advantage,

Figure 2-5 In Figure 2-5, which of the following is true?

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The opportunity cost of 1 pound of potatoes for the rancher is

Figure 2-7 If an economy operates at point A on the production possibilities curve shown in Figure 2-7,

Figure 2-1 In Figure 2-1, point A is