Econ 170 Exam

Otto manages a consulting firm. If otto wants his employees to produce as much as possible from the resources available, how should tasks be assigned?

Each task should be assigned to the employee who can do it at the lowest opportunity cost.

(Table: Eray and Ata's opportunity cost) Data for Eray's and Ata's cake decorating is given, which statements eplains who has the absolute advantage in decorating cakes?

Eray can decorate a cake in 120 minutes.

People have different abilities for performing the same two tasks, and you want to identify who has a comparative advantage in one of the tasks. Which of the following is NOT one of the three steps for identifying, who has a comparative advantage in performing the selected task?

Identify which person can perform the selected task most quickly.

The price of celery rieses, but nothing has changed on the supply side of the market. What does this mean to celery farmers?

It is a signal that celery is more valuable to consumers than it was before.

When people focus their efforts, on the tasks they have a comparative advantage in, what will happen to output?

More of all goods will be produced than if everyone produced everything for themselves.

(Table: Four individuals) The table lists the hours that it will take four individuals to clean out a garage and to trim a property's hedges.

Person A

Which of the following is NOT one of the three key roles that prices play in markets?

Prices have purchasing power.

Which of the following statements about international trade is TRUE?

Producers in different countries should specialize in the production of goods for which their opportunity cost is low.

Why would Emerald benefit from specializing based on comparative advantage?

She could enhance her living standards.

Which of the following is a TRUE statement about work assignments based on comparative advantage?

The person with the lowest opportunity cost at a task should perform it.

The price of a cup of coffee goes up. This communicates to Stella that coffee has become more valuable. Price is functioning as

a signal.

When price functions as a communication line between buyers and sellers around the world, it is functioning as

a signal.

Giselle buys doughnuts for breakfast once a week. The price of doughnuts falls, and the lower price induces her to buy doughnuts twice a week. This is an example of price functioning as

an incentive

Chantelle grows tomatoes and sells them at the farmer's market. Because the price of tomatoes rises, she is encouraged to grow and sell more. This is an example of price functioning as

an incentive.

You have a comparative advantage if you can complete a task:

at a lower opportunity cost than anyone else.

When a price is referred to as a signal, this means that price

communicates.

If Bishan wants to capitalize on comparative advantage in his life, then he should:

do more of what he is relatively good at and then trade for other things.

If you can complete a task at a lower opoportunity cost than anyone else, then you

have a comparative advantage in that task.

If you need to make a decision and all the information needed to make a good decision is not avaiable, then you:

have a knowledge problem.

When people focus on their comparative advantage and then trade for other things, they:

improve their standard of living or increase their leisure time.

The person who has a nabsolute advantage in a task.

is the one who is best at the task.

When you assign tasks to employees based on comparative advantage, task assignments go to those with the

lowest opportunity cost.

In markets, prices act as all of the following except

productivity

Raul works at a factory that produces wooden benches. The four main tasks are cutting the wood, constructing, sanding, and staining. Out of all the workers, Raul enjoys cutting the most, is the slowest at constructing, has the lowest opportunity cost for sanding, and is the fastest at staining. If his manager wants to maximize factory output, he will assign Raul to

sanding.

(Table: Four persons) The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. Use the data to answer the question.

2.4 loads of laundry will not be sorted and folded.

(Table: Four Persons) The table lists the minutes that it will take four persons to wash a car to sort and fold a load of laundry. Use the date to answer the question.

Asad

Which of the following is FALSE statement about assigning work based on comparative advantage?

Assign the person who is fastest or best at a task to do that task.

A knowledge problem exists when

the information needed to make a good decision is not available to a decision-maker.