ECON 104 - Mod 1 & 2 Homework

True or False: The basis for trade is comparative advantage, not absolute advantage.

True

Suppose South Korea can produce 100 computer chips with 12 hours of labor input and 50 bed linens with 6 hours of labor input. The US can produce 100 computer chips with 10 hours of labor input and 50 bed linens with 4 hours of labor input. The opportunity cost of producing 100 computer chips for South Korea is

100 Bed Linens

The opportunity cost of producing 100 computer chips for the US is:

125 Bed Linens

The opportunity cost of producing 50 bed linens for the US is:

40 Computer Chips

The opportunity cost of producing 50 bed linens for South Korea is:

50 Computer Chips

Economics promote which of the following as the way to make the best decision? A.) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost B.) Continue an enjoyable activity until you cannot afford to pursue it C.) Continue an enjoyable activity as long as you do not have to pay for it D. Continue an enjoyable activity until it is no longer enjoyable

A.) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

Jen makes $12 per hour and Sammie makes $24 per hour. Both Jen and Sammie like to eat hamburgers that cost $6 each. Select the correct answer below A.) Jen and Sammie's real wages are equal B.) Sammie's real wage is equal to 100 hamburgers C.) Jen's real wage is equal to 2 hamburgers D.) Sammie's real wage is equal to 2 hamburgers E.) Jen's real wage is higher than Sammie's real wage

C.) Jen's real wage is equal to 2 hamburgers

Which of the following is a positive economic statement? A.) The government should mandate electric automobiles B.) People should not buy SUVs C.) Scarcity necessitates that people make trade-offs D.) Foreign workers should not be allowed to work for lower wages than the citizens of a country

C.) Scarcity necessitates that people make trade-offs

Which of the following is a normative economic statement? A.) When the price of gasoline rises, the quantity of gasoline purchased falls B.) When the price of gasoline rises, transportation costs rise C.) The current high price of gasoline is the result of strong worldwide demand D.) The price of gasoline is too high

D.) The price of gasoline is too high

True or False: A straight line has a slope of zero.

False

True or False: Any output combination outside a production possibility frontier is associated with unused or underutilized resources.

False

True or False: If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.

False

True or False: If a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods.

False

True or False: One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

False

True or False: The decisions Apple makes in determining production levels for its iPhone is an example of a macroeconomics topic.

False

True or False: When voluntary exchange takes place, only one party gains from the exchange.

False

True or False: An increase in the labor force shifts the production possibility frontier inwards over time.

False, it will shift outward due to the influx in more resources in labor available

True or False: In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it cannot benefit by trading with the other country.

False, there can always be some sort of benefit when participating through trade

Which of the following best describes an assumption economists make about human behavior?

They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time

True or False: A college must decide if it wants to offer more Internet-based classes. This decision involves answering the economic question of "what to produce."

True

True or False: A curved line has slope values that change at every point.

True

True or False: An economic model is a simplified version of reality used to analyze real-world economic situations.

True

True or False: An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point inside the frontier.

True

True or False: Economic resources are also called factors of production.

True

True or False: Every individual, no matter how rich or poor, is faced with making trade-offs.

True

True or False: Examining the conditions that could lead to a recession in an economy is an example of a macroeconomics topic

True

True or False: For a person to have a comparative advantage in producing a product, she must be able to produce that product at a lower opportunity cost than her competitors.

True

True or False: If a country is producing efficiently and is on the production possibilities frontier, the only way to produce more of one good is to produce less of the other.

True

True or False: It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.

True

Using comparative advantage, which country should export bed linens?

U.S. (South Korea should import bed linens since they have a comparative advantage in producing computer chips since they have lower opportunity costs in producing computer chips and thus should specialize in producing computer chips. The US should import computer chips since they have lower opportunity costs in producing bed linens relative to South Korea and thus, have a comparative advantage in producing bed linens and should specialize in producing bed linens.)

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources