Chp. 2 & 3 Quiz

On a PPF, if a point is below the curve, the opportunity cost of raising the point to the curve is... A) 0 of the other product B) the amount of the other product given up to raise the point to the curve

A) 0 of the other product when moving up on the graph, you are only increasing your efficiency of producing the good, so you are not giving any of the other good.

Barb and Jim run a business that sets up and tests computers. The following. Assume that Barb and Jim can switch between setting up and testing computers at a constant term-3rate. Barb's opportunity cost of setting up one computer is testing.... info: (minutes to set up 1 computer: Barb 40, Jim 30) (minutes to test 1 computer: Barb 40, Jim 60) (number of computers set up in a 40 hr week: Barb 60, Jim 80) (number of computers tested in a 40 hr week: Barb 60, Joe 40) A) 1 computer and Jim's opportunity cost of setting up one computer is testing 1/2 computer. B) 1/2 computers and Jim's opportunity cost of setting up one computer is testing 1/2 computers. C) 2 computers and Jim's opportunity cost of setting up one computer is testing 1 computer. D) 1 computer and Jim's opportunity cost of setting up one computer is testing 2 computers.

A) 1 computer and Jim's opportunity cost of setting up one computer is testing 1/2 computer. 30/60=1/2 OR 40/80=1/2 (makes more sense when using quantity rather than time)

If Chile and Colombia switch from each country dividing its time equally between the production of coffee and soybeans to each country spending all of its time producing the good in which it has a comparative advantage, then total production of soybeans will increase by... info: Chile can produce 12S or 16C Colombia can produce 6S or 12C A) 6 pounds B) 3 pounds C) 12 pounds D) 9 pounds

B) 3 pounds original total: 9S(both) new total: 12S (Chile) opportunity cost 1S: 16/12C (Chile) and 12/6C (Columbia)

Chile's opportunity cost of one pound of coffee is... info: Chile can produce 12S or 16C Colombia can produce 6S or 12C A) 3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans. B) 3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans. C) 4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans. D) 4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans

B) 3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans. Chile: 12/16S Columbia: 6/12S

Which of the following trade-offs does the production possibilities frontier illustrate? A) If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption. B) Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. C) For an economy to produce and consume goods, it must sacrifice environmental quality. D) For an economy to consume more of one good, it must stop consuming the other good entirely.

B) Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other.

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 A) Ken has an absolute advantage in chairs. B) Traci has an absolute advantage in chairs. C) Ken has a comparative advantage in tables. D) Traci has a comparative advantage in chairs.

B) Traci has an absolute advantage in chairs.

Which of the following is not correct? A) The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. B) The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. C) The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. D) The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

D) The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. Barb has an absolute advantage in... info: (minutes to set up 1 computer: Barb 40, Jim 30) (minutes to test 1 computer: Barb 40, Jim 60) (number of computers set up in a 40 hr week: Barb 60, Jim 80) (number of computers tested in a 40 hr week: Barb 60, Joe 40) A) both setting up and testing computers and a comparative advantage in setting up computers. B) neither setting up nor testing computers and a comparative advantage in setting up computers. C) neither setting up nor testing computers and a comparative advantage in testing computers. D) testing computers and a comparative advantage in testing computers.

D) testing computers and a comparative advantage in testing computers.

On a PPF, an economy cannot produce at... A) a point on the curve B) a point in the function, but not on the cure C) a point to the right of the curve D) a point above the curve E) both C and D

E) a point to the right of the curve and a point above the curve.