Question 1

Ken and Traci are two woodworkers who both make tables and chairs.In one month,Ken can make 3 tables or 18 chairs,whereas Traci can make 8 tables or 24 chairs.Given this,we know that the opportunity cost of 1 table is

Accepted Answer

Ken's opportunity cost for 1 table is 6 chairs (18 chairs/3 tables), and Traci's opportunity cost for 1 table is 3 chairs (24 chairs/8 tables).

Question 2

Absolute advantage is found by comparing different producers'

Accepted Answer

Absolute advantage is the ability of a producer to produce more of a certain product with the same amount of resources as another producer. Input requirements per unit of output directly relate to a producer's ability to produce more with the same resources, making it the best choice for describing absolute advantage. Opportunity costs, payments to land, labor, and capital, and locational and logistical circumstances are not directly related to the producer's ability to produce more with the same resources.

Question 3

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then

Accepted Answer

Jim has a comparative advantage in producing baseball bats because his opportunity cost is lower than Tom's.

Question 4

The opportunity cost of an item is

Accepted Answer

Opportunity cost is what you give up to get that item. It refers to the value of the best alternative forgone, which could have been chosen instead of the item in question. Therefore, option B is the correct choice as it accurately describes the concept of opportunity cost.

Question 5

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Accepted Answer

The answer of Suppose Susan can wash three windows per...

Question 6

Assume for the United States that the opportunity cost of each airplane is 50 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

Accepted Answer

The answer of Assume for the United States that the...

Question 7

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Accepted Answer

An absolute advantage exists when a producer requires fewer inputs to produce a given amount of a good compared to other producers. This concept focuses on the efficiency in the use of inputs, not on the opportunity cost or the exclusivity of production.

Question 8

Travis can mow a lawn in two hours or he can trim a tree in one hour.Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Accepted Answer

Travis can trim a tree in one hour, while Ricardo takes two hours, giving Travis an absolute advantage in trimming trees.

Question 9

If he devotes all of his available resources to cantaloupe production,a farmer can produce 120 cantaloupes.If he sacrifices 1.5 watermelons for each cantaloupe that he produces,it follows that

Accepted Answer

The opportunity cost of producing one cantaloupe is 1.5 watermelons, meaning the farmer has to give up 1.5 watermelons to produce one cantaloupe. Therefore, the opportunity cost of one watermelon is 2/3 of a cantaloupe. Option A is not necessarily true as we do not know the amount of resources required for watermelon production. Option B is incorrect as we do not have information to compare the farmer's production to other farmers. Option D is not necessarily true as we do not have information on the shape of the farmer's production possibilities frontier.

Question 10

Ken and Traci are two woodworkers who both make tables and chairs.In one month,Ken can make 3 tables or 18 chairs,whereas Traci can make 8 tables or 24 chairs.Given this,we know that the opportunity cost of 1 chair is

Accepted Answer

The opportunity cost of a chair is the amount of tables that one woodworker could have made if they hadn't made the chairs. For Ken, he can either make 3 tables or 18 chairs in one month, which means the opportunity cost of 1 chair for Ken is 1/3 of a table (since he could have made 1 table if he didn't make the chairs, and 1/3 is the fraction of the month he spent making chairs instead). For Traci, she can either make 8 tables or 24 chairs in one month, which means the opportunity cost of 1 chair for Traci is 1/3 of a table (since she could have made 1 table if she didn't make the chairs, and again, 1/3 is the fraction of the month she spent making chairs instead). Therefore, the answer is A, 1/6 table for Ken and 1/3 table for Traci.

Question 11

What must be given up to obtain an item is called

Accepted Answer

Opportunity cost refers to the value of the next best alternative forgone when making a decision. It represents what must be given up in order to obtain something else. Out-of-pocket cost refers only to the actual monetary cost of an item or service. Comparative worth and absolute value are not relevant concepts in this context.

Question 12

Ken and Traci are two woodworkers who both make tables and chairs.In one month,Ken can make 3 tables or 18 chairs,whereas Traci can make 8 tables or 24 chairs..Given this,we know that

Accepted Answer

Traci can produce more chairs in a month (24) than Ken (18), giving her an absolute advantage in chairs.

Question 13

Kelly and David are both capable of repairing cars and cooking meals.Which of the following scenarios is not possible?

Accepted Answer

According to the principle of comparative advantage, each person should specialize in the task they have a comparative advantage in and trade with each other. Therefore, it is not possible for one person to have a comparative advantage in both repairing cars and cooking meals since they would then have no incentive to trade with the other person. This rules out options A, C, and D. Option B is possible, but not as likely since it is rare for one person to have an absolute advantage in both tasks.

Question 14

Assume for Brazil that the opportunity cost of each cashew is 100 peanuts.Which of these pairs of points could be on Brazil's production possibilities frontier?

Accepted Answer

For every 1 cashew produced, Brazil gives up the opportunity to produce 100 peanuts. 
Therefore, the production possibilities frontier will have a negative slope of -100. 
Choice A has a slope of (-30,000+35,000)/(200-150) = 100, which is the opportunity cost of producing cashews. 
Choice B has a slope of (-30,000+40,000)/(200-150) = 200, which means for every 1 cashew produced, Brazil gives up the opportunity to produce 200 peanuts, which is not in line with the given opportunity cost. 
Choice C has a slope of (-50,000+60,000)/(200-300) = 100, which is the opportunity cost of producing cashews. 
Choice D has a slope of (-60,000+80,000)/(200-300) = 200, which again, is not in line with the given opportunity cost. 
Therefore, choice A is the only possible combination that fits the given opportunity cost of cashews and peanuts.

Question 15

Suppose a gardener produces both tomatoes and squash in his garden.If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes,then the opportunity cost of 1 bushel of tomatoes is

Accepted Answer

The opportunity cost is the reciprocal when switching the goods. If 1 bushel of squash costs 2/5 bushel of tomatoes, then 1 bushel of tomatoes costs 5/2 bushels of squash.

Question 16

Suppose a gardener produces both tomatoes and squash in his garden.If he must give up 8 bushels of squash to get 5 bushels of tomatoes,then his opportunity cost of 1 bushel of tomatoes is

Accepted Answer

Opportunity cost can be calculated as the ratio of the cost of one option to the cost of the other option forgone. The gardener gives up 8 bushels of squash to get 5 bushels of tomatoes. So, the opportunity cost of 1 bushel of tomatoes is 8/5 or 1.6 bushels of squash. Therefore, the answer is B.

Question 17

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

Accepted Answer

Shawn producing more donuts in one day than Sue means Shawn has an absolute advantage in the production of donuts, as absolute advantage refers to the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group. Comparative advantage, on the other hand, involves the ability to produce a good at a lower opportunity cost, which is not determined by the information given.

Question 18

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks.Which of the following is not possible?

Accepted Answer

Comparative advantage means having a lower opportunity cost in producing a good compared to another producer. It's not possible for Jim to have a comparative advantage in both goods simultaneously, as comparative advantage is relative and depends on the opportunity costs of both producers.

Question 19

If Korea is capable of producing either shoes or soccer balls or some combination of the two,then

Accepted Answer

If Korea has the option to produce either shoes or soccer balls, then it has a comparative advantage in one product over the other. The opportunity cost of shoes is the inverse of the opportunity cost of soccer balls. Therefore, Korea should focus on producing the product with a lower opportunity cost and trade with another country for the other product. This will enable both countries to benefit from trade.

Question 20

A farmer has the ability to grow either corn or cotton or some combination of the two.Given no other information,it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

Accepted Answer

The opportunity cost of a bushel of corn is the amount of cotton that could have been produced instead, and vice versa. Since the farmer can only choose between the two crops, the opportunity cost of one will always be the inverse of the other. Therefore, the opportunity cost of a bushel of corn multiplied by the opportunity cost of a bushel of cotton will always be equal to 1.

Quiz 3: Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization