B BUS 221 CHAPTER 2 (Part 1)

37) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Larry's opportunity cost of selling a truck is selling: 37) ______ A) 2 cars. B) 1 car. C) 1/2 of a car. D) 10 cars.

A) 2 cars.

28) According to Table 02-01, Corey's opportunity cost of delivering of a pizza is making: 28) ______ A) 2 pizzas. B) 6 pizzas. C) 12 pizzas. D) 1/2 of a pizza.

A) 2 pizzas.

14) Refer to the table below. Julia's opportunity cost of making a pie is: 14) ______ A) 5/6 of a cake B) 6/5 of a cake C) 60 cakes D) 6 cakes

A) 5/6 of a cake

5) Refer to the table below. Julia's opportunity cost of making a cake is: 15) ______ A) 6/5 of a cake B) 5/6 of a cake C) 6 cakes D) 60 cakes

A) 6/5 of a cake

9) If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ________ has a(n) ________ advantage in producing shoes. 9) _______ A) Jane; absolute B) Bob; comparative C) Jane; comparative D) Bob; absolute

A) Jane; absolute

50) Points that lie beneath the production possibilities curve are: 50) ______ A) attainable but inefficient B) attainable and efficient C) unattainable and inefficient D) unattainable but efficient

A) attainable but inefficient

45) A country is most likely to have a comparative advantage in the production of cars if: 45) ______ A) it has a relative abundance in the natural resources needed to produce cars. B) it imports most of the raw materials necessary to produce cars. C) it has strict environmental protection laws governing automobile emissions. D) its citizens prefer driving cars to other forms of transportation.

A) it has a relative abundance in the natural resources needed to produce cars.

27) According to Table 02-01, Corey's opportunity cost of making of a pizza is delivering: 27) ______ A) 3/2 of a pizza. B) 1/2 of a pizza. C) 2 pizzas. D) 2/3 of a pizza.

B) 1/2 of a pizza.

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. What is the opportunity cost to Dan of making a sandwich? 18) ______ A) 3 smoothies B) 1/3 of a smoothie C) 15 smoothies D) 5 smoothies

B) 1/3 of a smoothie

24) Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. What is the opportunity cost to Cathy of making a cake? 24) ______ A) 1.33 pies. B) 2/3 of a pie. C) 1 pie. D) 1.5 pies.

B) 2/3 of a pie.

30) According to Table 02-01, Pat's opportunity cost of delivering a pizza is making: 30) ______ A) 10 pizzas B) 2/3 of a pizza C) 3/2 of a pizza D) 12 pizzas

B) 2/3 of a pizza

2) If Al has an absolute advantage over Beth in preparing meals, then: 2) _______ A) the problem of scarcity applies to Beth but not to Al. B) Al can prepare more meals in a given time period than Beth. C) it takes Al more time to prepare a meal than Beth. D) Al's opportunity cost of preparing a meal is lower than is Beth's.

B) Al can prepare more meals in a given time period than Beth.

31) Refer to Table 02-01. ________ has the comparative advantage in making pizza, and ________ has the comparative advantage in delivering pizza. 31) ______ A) Pat; Pat B) Corey; Pat C) Corey; Corey D) Pat; Corey

B) Corey; Pat

11) Refer to the table below. According to the table, Julia has the absolute advantage in: 11) ______ A) neither pies nor cakes. B) both pies and cakes. C) cakes. D) pies.

B) both pies and cakes.

1) An individual has an absolute advantage in producing pizzas if that individual: 1) _______ 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) charges the lowest price for pizzas. D) has a higher opportunity cost of producing pizzas than anyone else.

B) can produce more pizzas in a given amount of time than anyone else.

7) If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ________ in the production of that good. 7) _______ A) absolute advantage and possibly a comparative advantage. B) comparative advantage C) comparative advantage and an absolute advantage D) absolute advantage

B) comparative advantage

25) According to Table 02-01, Corey has the absolute advantage in: 25) ______ A) neither making nor delivering pizza. B) delivering pizza. C) making and delivering pizza. D) making pizza.

B) delivering pizza.

32) Refer to Table 02-01. Based on their comparative advantages, Pat should specialize in ________, and Corey should specialize in ________. 32) ______ A) making pizza; delivering pizza B) delivering pizza; making pizza C) both making pizza and delivering pizza; neither making pizza nor delivering pizza D) neither making pizza nor delivering pizza; both making pizza and delivering pizza

B) delivering pizza; making pizza

10) Refer to the table below. According to the table, Martha has the absolute advantage in: 10) ______ A) cakes. B) neither pies nor cakes. C) pies. D) both pies and cakes.

B) neither pies nor cakes.

49) Points that lie outside the production possibilities curve are ________, and points that lie inside the production possibilities curve are ________. 49) ______ A) inefficient; efficient B) unattainable; attainable C) attainable; unattainable D) efficient; inefficient

B) unattainable; attainable

12) Refer to the table below. Martha's opportunity cost of making of a pie is: 12) ______ A) 4/3 of a cake. B) 80 cakes. C) 3/4 of a cake. D) 8 cakes.

C) 3/4 of a cake

3) Refer to the table below. Martha's opportunity cost of making a cake is: 13) ______ A) 3/4 of a pie. B) 60 pies. C) 4/3 of a pie. D) 6 pies

C) 4/3 of a pie.

36) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, ________ has an absolute advantage in selling cars and ________ has an absolute advantage in selling trucks. 36) ______ A) Joe; Joe B) Larry; Joe C) Larry; Ralph D) Ralph; Larry

C) Larry; Ralph

23) Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct? 23) ______ A) There are no gains from specialization and trade. B) Cathy should specialize in both pies and cakes. C) Lewis should specialize in pies, and Cathy should specialize in cakes. D) Cathy should specialize in pies, and Lewis should specialize in cakes.

C) Lewis should specialize in pies, and Cathy should specialize in cakes.

34) Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. If Alex and Lou work out an efficient arrangement for these two chores, then under that arrangement: 34) ______ A) Alex and Lou each would do half of the cooking and half of the cleaning. B) Lou would do all of the cleaning and all of the cooking. C) Lou would do all of the cleaning, while Alex would do all of the cooking. D) Alex would do all of the cleaning, while Lou would do all the cooking.

C) Lou would do all of the cleaning, while Alex would do all of the cooking.

16) Refer to the table above. ________ has the comparative advantage in making pies and ________ the comparative advantage in making cakes. 16) ______ A) Julia; Julia B) Julia; Martha C) Martha; Julia D) Martha; Martha

C) Martha; Julia

42) Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore: A) There are no gains to specialization and trade for Maryann. B) Ginger should specialize in the activity for which she has an absolute advantage. C) Maryann should specialize in the activity for which she has a comparative advantage. D) There are no gains to specialization and trade for Ginger.

C) Maryann should specialize in the activity for which she has a comparative advantage.

21) Suppose it takes Paul 3 hours to bake a cake and 2 hours to move the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct? 21) ______ A) Paul has the comparative in mowing the lawn B) Paul has the absolute advantage in baking cakes C) Paul has the comparative in baking cakes D) Paul has the absolute advantage in mowing the lawn.

C) Paul has the comparative in baking cakes

41) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, ________ should specialize in truck sales, and ________ should specialize in car sales. 41) ______ A) Larry; Ralph B) Larry; Joe C) Ralph; Larry D) Joe; Ralph

C) Ralph; Larry

26) According to Table 02-01, Pat has the absolute advantage in: 26) ______ A) making and delivering pizza. B) making pizza. C) delivering pizza. D) neither making nor delivering pizza.

C) delivering pizza.

44) In general, individuals and nations should specialize in producing goods ________ other individuals or nations. 44) ______ A) for which they have a higher opportunity cost compared to B) that they can produce less quickly than C) for which they have a lower opportunity cost compared to D) that they can produce more quickly than

C) for which they have a lower opportunity cost compared to

40) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Joe's opportunity cost of selling a car is ________ than Ralph's, and Joe's opportunity cost of selling a car is ________ than Larry's. 40) ______ A) greater; less B) greater; greater C) less; greater D) less; less

C) less; greater

47) A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n): 47) ______ A) consumption possibilities curve. B) production function. C) production possibilities curve. D) supply curve.

C) production possibilities curve.

48) The production possibilities curve shows: 48) ______ A) how increasing the production of one good allows production of the other good to also rise. B) the minimum production of one good for every possible production level of the other good. C) the maximum production of one good for every possible production level of the other good. D) how increasing the resources used to produce one good increases the production of the other good.

C) the maximum production of one good for every possible production level of the other good.

5) If you have a comparative advantage in a particular task, then: 5) _______ A) you have specialized in that task, while others have not. B) you are better at it than other people. C) you give up less to accomplish that task than do others. D) you give up more to accomplish that task than do others.

C) you give up less to accomplish that task than do others.

38) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Joe's opportunity cost of selling a truck is selling: 38) ______ A) 4 cars. B) 1/3 of a car. C) 9 cars. D) 1 car.

D) 1 car.

39) Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Ralph's opportunity cost of selling a truck is selling: 39) ______ A) 4 cars. B) 3 cars. C) 1/3 of a car. D) 1/4 of a car.

D) 1/4 of a car.

35) Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. For Alex, the opportunity cost of cleaning one room is making ________ meal(s); for Lou the opportunity cost of cleaning one room is making ________ meal(s). 35) ______ A) 1; 5/4 B) 4; 4 C) 3; 5 D) 1; 4/5

D) 1; 4/5

29) According to Table 02-01, Pat's opportunity cost of making a pizza is delivering: 29) ______ A) 3 pizzas B) 2 pizzas C) 2/3 of a pizza D) 3/2 of a pizza

D) 3/2 of a pizza

8) Which of the following statements is true? 8) _______ A) Comparative advantage requires absolute advantage. B) Absolute advantage requires comparative advantage. C) Absolute advantage implies comparative advantage. D) Comparative advantage does not require absolute advantage.

D) Comparative advantage does not require absolute advantage.

19) 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? 19) ______ A) Dan has the comparative and absolute advantage in smoothies. B) Dan has the comparative advantage in sandwiches, but Tracy has the absolute advantage in sandwiches. C) Dan has the comparative advantage in smoothies, but Tracy has the absolute advantage in smoothies. D) Dan has the comparative and absolute advantage in sandwiches.

D) Dan has the comparative and absolute advantage in sandwiches.

0) 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? 20) ______ A) Dan should specialize in both sandwiches and smoothies. B) Dan should specialize in sandwiches, and Tracy should specialize in smoothies. C) Tracy should specialize in sandwiches and smoothies. D) Dan should specialize in smoothies, and Tracy should specialize in sandwiches.

D) Dan should specialize in smoothies, and Tracy should specialize in sandwiches.

3) If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that: 3) _______ A) Les has both comparative and absolute advantage in producing pants. B) Les has a comparative advantage in producing pants. C) Eva has a comparative advantage in producing pants. D) Les has an absolute advantage in producing pants.

D) Les has an absolute advantage in producing pants.

22) Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct? 22) ______ A) Cathy has a comparative and absolute advantage in pies. B) Cathy has a comparative advantage in pies, and Lewis has an absolute advantage in pies. C) Lewis has a comparative and absolute advantage in pies. D) Lewis has a comparative advantage in pies, and Cathy has an absolute advantage in pies.

D) Lewis has a comparative advantage in pies, and Cathy has an absolute advantage in pies.

4) 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. 4) _______ A) relative B) natural C) comparative D) absolute

D) absolute

43) In general, individuals and nations should specialize in producing those goods for which they have a(n): 43) ______ A) absolute advantage. B) absolute advantage and a comparative advantage. C) absolutely comparative advantage. D) comparative advantage.

D) comparative advantage.

46) The emergence of English as the de facto world language has ________ a comparative advantage in the production of books, movies and popular music: 46) ______ A) had no effect on which country has B) given all countries C) given English-speaking countries D) given non-English-speaking countries

D) given non-English-speaking countries

6) Larry has a comparative advantage over his classmates in writing term papers if he: 6) _______ A) can write term papers faster than his classmates. B) always earns an A on his term papers. C) has an absolute advantage in writing term papers. D) has a lower opportunity cost of writing term papers than his classmates.

D) has a lower opportunity cost of writing term papers than his classmates.

17) Refer to the table below. Based on their comparative advantage, Martha should specialize in ________ while Julia should specialize in _______. 17) ______ A) neither pies nor cakes; both pies and cakes B) both pies and cakes; neither pies nor cakes C) cakes; pies D) pies; cakes

D) pies; cakes