Econ Assignment #2

A company can either produce 600 skateboards or 900 snowboards in one week. What is OC of making 900 snowboards?

600 skateboards

Helen gives up the opportunity to bake 40 cakes for each room she paints. Josh can paint one room for 60 cakes. The OC of a cake for josh is

painting 1/60 of a room

A production possibilities frontier will be bowed out if

resources are not perfectly adaptable to making each good.

Comparative advantage is

the ability of an individual to produce a good at a lower opportunity cost than other individuals can

When we look at a production possibilities curve, the opportunity cost can be understood as

the amount of the other good that must be given up for one more unit of production

The opportunity cost of a particular activity

varies from person to person

The opportunity cost of choosing a particular activity

varies, depending on time and circumstances

If Evan has an absolute advantage in cleaning and bookkeeping compared to Gloria then

we can conclude nothing about comparative advantage

Wealth is:

whatever people value

If one person has the absolute advantage in producing both of two goods then that person

will have comparative advantage in only one good

The law of comparative advantage says that

the individual with the lowest OC of producing a particular good should produce it

Joe can make 15 violins or 15 violas

the opportunity cost of producing 1 viola is 1 violin

What is most appropriately measured along one axis of the production possibilities frontier diagram

the quantity of a good produced

Eileen has comparative advantage over Janice in piano tuning but not in shoe polishing

Janice must have a lower opportunity cost of shoe polishing

If Jason can chop up more carrots per minute than Sara...

Jason has absolute advantage in carrot chopping

John washes a car in 75 minutes and a dog in 15 Maria washes a car in 40 minutes and a dog in 10

The opportunity cost of washing a dog is greater for Maria

A "free" good is

a good obtained without any sacrifice whatsoever

On a given production possibilities frontier, what is assumed to be fixed

amount of labor, capital, land and resources available and the level of technology

In a voluntary exchange

both parties tend to receive more in value than they give up

Any combo of two goods that lies beyond the production possibilities frontier is

currently impossible to produce

Wealth equaling material things is

false. Must be rejected

With a good on each axis, the production possibilities frontier is downward-sloping, which suggests

the production of one good ultimately means sacrificing production of the other.

The opportunity cost of an activity is

the value of the best alternative not chosen