chapter 2
You have an absolute advantage whenever you
can produce more of something than others with the same resources
Which of the following is not scarce according to the economic definition?
none
After specialization and trade, France gains by consuming the same amount of wine and----- additional pound(s) of schnitzel (enter a numeric response using an integer) and Germany gains by consuming the same amount of wine and------ additional pound(s) of schnitzel.
1 5 if there is 1, 6, 3, 8, 3, 7
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Haley's opportunity cost of making a bracelet?
1 1/3 necklaces
The figure to the right shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. What is the opportunity cost of one pound of meat?
1 1/3 pounds of vegetables
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Serena's opportunity cost of making a necklace?
1/2 of a bracelet
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. What is Honduras's opportunity cost of producing one canoe?
1/5 of a sailboat
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. What is Guatemala's opportunity cost of producing one canoe?
1/6 of a sailboat
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Serena's opportunity cost of making a bracelet?
2 necklaces
Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?
25 silk leaves
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Haley's opportunity cost of making a necklace?
3/4 of a bracelet
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. What is Honduras's opportunity cost of producing one sailboat?
5 canoes
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. What is Guatemala's opportunity cost of producing one sailboat?
6 canoes
The primary difference between absolute and comparative advantage is
Absolute advantage The ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources. Comparative advantage The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.
For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the two countries?
Australia has the comparative advantage in boomerangs
Your consumption point before trade is illustrated by point -----
c
The basis for trade is ------- advantage
Comparative
What do economists mean by scarcity?
Economists mean that unlimited wants exceed limited resources.
If you and your neighbor both grow oranges and grapefruits and you are better than your neighbor at picking both oranges and grapefruits, there can be no advantage to you in specializing in growing only one type of fruit and trading with your neighbor for the other.
False
Suppose that France and Germany both produce wine and schnitzel. The table below shows combinations of the goods that each country can produce in a day. Who has the comparative advantage in producing wine and who has the comparative advantage in producing schnitzel?
France has a comparative advantage producing wine and Germany has a comparative advantage producing schnitzel.
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. If the two countries specialize and trade, who should export canoes?
Guatemala
The table to the right shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. Does either Guatemala or Honduras have an absolute advantage and if so, in what product?
Guatemala has an absolute advantage in producing both products.
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Which of the following statements is true?
Haley has a comparative advantage in making bracelets and Serena in making necklaces.
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Which of the following statements is true?
Haley has an absolute advantage in making bracelets and Serena in making necklaces
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. If the two countries specialize and trade, who should export sailboats?
Honduras
Which of the following statements is true?
Individuals who have never been the best at doing anything can still have a comparative advantage in producing some product.
If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.
Linear
Suppose we can divide all the goods produced by an economy into two types: consumption goods and capital goods. Capital goods, such as machinery, equipment, and computers, are goods used to produce other goods. Is it likely that the production possibilities frontier in this situation would be a straight line: click on the icon for an example or bowed out: click on the icon for an example?
The production possibilities frontier would likely be bowed out because not all resources are equally well suited to produce both consumption and capital goods.
During the 1928 presidential election campaign, Herbert Hoover, the Republican candidate, argued that the United States should only import those products that could not be produced here. Do you believe that this would be a good policy? Explain
This is not a good policy because it does not necessarily result in countries producing those goods for which they have a comparative advantage
It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.
True
An inward shift of a nation's production possibilities frontier can occur due to
a natural disaster like a hurricane or bad earthquake
The primary difference between absolute and comparative advantage is
absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.
Refer to the table to the right. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear
along Tomaso's production possibilities frontier
Which of the following may have caused the shift you have drawn? (Check all that apply.)
an increase in the capital stock advances in technology a larger labor force
Your neighbors consumption point before trade is illustrated by point---
b
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. Guatemala has a comparative advantage in the production of
canoes
Refer to the table to the right. Assume Tomaso's Trattoria only produces pizzas and calzones. Tomaso faces ________ opportunity costs in the production of pizzas and calzones.
constant
Tesla Motors manufacturers...........In deciding to open the Fremont plant, Telsa
faced a trade-off between high cost and lower precision
In a two−good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods
false
The production possibilities frontier model shows that
if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good
The production possibilities frontier will shift outward
if technology advances
As women's wages have risen relative to men's wages, the opportunity cost to women of doing housework has ________ than has the opportunity cost to men.
increased more
A production possibilities frontier with a bowed outward shape indicates
increasing opportunity costs as more and more of one good is produced
Refer to the diagram to the right, point A is
inefficient in that not all resources are being used
In a production possibilities frontier model, a point ________ the frontier is productively inefficient.
inside
Refer to the table to the right. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 15 calzones would appear
inside Tomaso's production possibilities frontier
The production possibilities frontier shows the --------- combinations of two products that may be produced in a particular time period with available resources
maximum attainable
Which point(s) are unattainable? Briefly explain why.
point V
At which point is the country's future growth rate likely to be the highest? Briefly explain why.
point W
Which point(s) are efficient? Briefly explain why.
point w,x,y
Which point(s) are inefficient? Briefly explain why.
point z
The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. Honduras has a comparative advantage in the production of
sailboats
A production possibilities frontier:
shows the maximum attainable combinations of two goods that may be produced with available resources.
Refer to the diagram to the right, point B is
technically efficient
One of the great benefits of trade is
that it makes it possible for society to become better off by increasing both its production and its consumption.
The principle of opportunity cost is that
the economic cost of using a factor of production is the alternative use of that factor that is given up
It is possible to have an absolute advantage in producing a good or service without having a comparative advantage.
true
Refer to the diagram to the right, point C is
unattainable with current resources
We can show economic inefficiency:
with points inside the production possibilities frontier.
We can show economic efficiency:
with points on the production possibilities frontier.
