Question 1

Refer to the table below. Julia's opportunity cost of making a pie is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)60 cakes
B)6 cakes
C)6/5 of a cake
D)5/6 of a cake

Accepted Answer

Julia's opportunity cost of making a pie is the time it takes to make a pie divided by the time it takes to make a cake, which is 50/60 = 5/6 of a cake.

Question 2

If you have a comparative advantage in a particular task, then:
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.

Accepted Answer

When you have a comparative advantage in a particular task, it means that you can produce that task at a lower opportunity cost than others. In other words, you give up less resources (e.g. time, money, labor) to produce that task compared to others. This allows you to specialize in that task and trade with others who have a comparative advantage in different tasks, leading to overall increased efficiency and productivity in the economy.

Question 3

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 more of a certain good or service in a given amount of time than someone else. Therefore, choice B is the correct answer. Choice A refers to comparative advantage, which is different from absolute advantage. Choice C is incorrect because having a higher opportunity cost would mean that the individual is less efficient at producing pizzas. Choice D is also incorrect because charging the lowest price for pizzas does not necessarily mean that the individual has an absolute advantage in producing them.

Question 4

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

Absolute advantage refers to a country's ability to produce a good or service at a lower cost compared to another country. Comparative advantage, on the other hand, refers to a country's ability to produce a good or service at a lower opportunity cost compared to another good or service.

Therefore, comparative advantage does not require absolute advantage. A country can have a comparative advantage in producing a good or service, even if it does not have an absolute advantage in producing that good or service. The theory of comparative advantage suggests that countries should specialize in producing goods or services in which they have a comparative advantage, and trade with other countries to obtain goods or services in which they do not have a comparative advantage.

Question 5

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 based on lower opportunity cost. If Larry has a lower opportunity cost of writing term papers than his classmates, it means he gives up less of another activity (such as studying for other classes or working a part-time job) in order to write a term paper. This means he is more efficient in writing term papers than his classmates, and therefore has a comparative advantage in that task.

Question 6

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 a nation's ability to produce a greater amount of a certain good or service compared to another nation using the same amount of resources. If a nation can produce more computers than any other nation, then it has an absolute advantage in computer production. Relative advantage refers to a nation's ability to produce a good or service at a lower opportunity cost compared to another nation, whereas comparative advantage refers to a nation's ability to produce a good or service at a lower opportunity cost compared to producing other goods or services domestically. Natural advantage refers to a nation's endowed resources or geographical location which gives it an inherent advantage in certain industries or natural resources.

Question 7

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 pants at a faster rate than Eva, meaning he has an absolute advantage in pant production. Comparative advantage refers to the ability to produce a good at a lower opportunity cost, which is not provided in the given information.

Question 8

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

Jane has an absolute advantage because she can produce more pairs of shoes per hour than Bob.

Question 9

Refer to the table below. Julia's opportunity cost of making a cake is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)60 cakes
B)6 cakes
C)6/5 of a cake
D)5/6 of a cake

Accepted Answer

Julia's opportunity cost of making a cake is the time she could have spent making pies instead. It takes her 60 minutes to make a cake and 50 minutes to make a pie. Therefore, the opportunity cost is 60/50 = 6/5 of a pie, which translates to 6/5 of a cake.

Question 10

Refer to the table below. Based on their comparative advantage, Martha should specialize in _______ while Julia should specialize in _______. $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
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

Martha has a comparative advantage in making pies because she can make pies in 60 minutes, while it takes Julia 50 minutes to make a pie. Julia has a comparative advantage in making cakes because she can make cakes in 60 minutes, while it takes Martha 80 minutes to make a cake. Therefore, Martha should specialize in making pies and Julia should specialize in making cakes.

Question 11

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 12

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

To calculate opportunity cost, we need to determine what Dan gives up by making a sandwich. In the time it takes Dan to make a sandwich, he could have made 1/3 of a smoothie (5 minutes / 15 minutes per smoothie = 1/3). Therefore, the opportunity cost to Dan of making a sandwich is 1/3 of a smoothie.

There is no "best choice(s)" in this question, so only one answer is provided.

Question 13

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 14

Refer to the table below. Martha's opportunity cost of making a cake is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
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...

Question 15

Refer to the table above. ______ has the comparative advantage in making pies and ______ the comparative advantage in making cakes. $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)Martha; Martha
B)Julia; Julia
C)Martha; Julia
D)Julia; Martha

Accepted Answer

To determine comparative advantage, we look at the opportunity cost of producing each item. Martha's opportunity cost of making a pie is 80/60 = 4/3 cakes, while Julia's opportunity cost of making a pie is 60/50 = 6/5 cakes. Therefore, Julia has a lower opportunity cost of making pies and thus the comparative advantage in making pies. Conversely, Martha has a higher opportunity cost of making pies and a lower opportunity cost of making cakes, giving her the comparative advantage in making cakes. Therefore, the correct answer is C, as Martha has the comparative advantage in making cakes and Julia has the comparative advantage in making pies.

Question 16

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

Having an absolute advantage means that one can produce more of a good or service in a given time period than another person. Therefore, Al can prepare more meals in a given time period than Beth.

Question 17

Refer to the table below. According to the table, Martha has the absolute advantage in: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)pies.
B)neither pies nor cakes.
C)cakes.
D)both pies and cakes.

Accepted Answer

Martha takes more time than Julia to make both a pie and a cake, so she does not have an absolute advantage in either.

Question 18

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

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).

Question 19

Refer to the table below. According to the table, Julia has the absolute advantage in: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)pies.
B)neither pies nor cakes.
C)cakes.
D)both pies and cakes.

Accepted Answer

Julia has the absolute advantage in both pies and cakes because she takes less time than Martha to make each.

Question 20

Refer to the table below. Martha's opportunity cost of making of a pie is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$
A)3/4 of a cake.
B)4/3 of a cake.
C)8 cakes.
D)80 cakes.

Accepted Answer

To determine opportunity cost, we need to look at what Martha would have to give up to make a pie. Martha's time to make a pie is 60 minutes, and her time to make a cake is 80 minutes. Therefore, her opportunity cost of making a pie is the time it would take her to make a cake instead, which is 80 minutes.

Next, we need to compare Martha's opportunity cost to Julia's time to make a cake, which is 60 minutes. Since Julia's time to make a cake is less than Martha's opportunity cost of making a cake, it means Julia has a comparative advantage in making cakes.

So, Martha should focus on making pies, and her best choice would be to make a pie rather than spending 80 minutes to make a cake. Therefore, her opportunity cost of making a pie is 3/4 of a cake (60 minutes divided by 80 minutes = 0.75, or 3/4).

Quiz 2: Comparative Advantage

If you have a comparative advantage in a particular task, then:

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

Which of the following statements is true?

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

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.

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

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

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

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?

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

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?