Question 1

The price of firewood rises, which encourages Marcella to buy less firewood. Price is functioning as

Accepted Answer

A) a signal. 
B) a bundle of information. 
C) a buyer. 
D) an incentive. 
A) a signal. 
B) a bundle of information. 
C) a buyer. 
D) an incentive. D

Question 2

When trade is based on comparative advantage

Accepted Answer

A) producers lose if they become more specialized. 
B) any gains from trade are equally shared across the trading partners. 
C) one trading partner may gain at the expense of the other. 
D) both trading partners end up better off than when there is no trade. 
A) producers lose if they become more specialized. 
B) any gains from trade are equally shared across the trading partners. 
C) one trading partner may gain at the expense of the other. 
D) both trading partners end up better off than when there is no trade. D

Question 3

The principle of comparative advantage applies to interactions

Accepted Answer

A) between people but not in business production decisions. 
B) in business production decisions but not between people. 
C) between people as well as in business production decisions. 
D) in neither business production decisions nor between people. 
A) between people but not in business production decisions. 
B) in business production decisions but not between people. 
C) between people as well as in business production decisions. 
D) in neither business production decisions nor between people. C

Question 4

(Table: Bruno and Sasha's opportunity cost) The table provides data on the number of minutes it takes for Bruno and Sasha to each change a tire and iron a dress shirt. Use the data to answer the question.
When changing a car's tire, Bruno's opportunity cost is _____, and Sasha's opportunity cost is _____.

Accepted Answer

A) .6 of an ironed dress shirt; .67 of an ironed dress shirt 
B) .67 of an ironed dress shirt; .6 of an ironed dress shirt 
C) 1.67 ironed dress shirts; 1.5 ironed dress shirts 
D) 1.5 ironed dress shirts; 1.67 ironed dress shirts 
A) .6 of an ironed dress shirt; .67 of an ironed dress shirt 
B) .67 of an ironed dress shirt; .6 of an ironed dress shirt 
C) 1.67 ironed dress shirts; 1.5 ironed dress shirts 
D) 1.5 ironed dress shirts; 1.67 ironed dress shirts

Question 5

Summarize the three steps for identifying who has a comparative advantage in a task.

Accepted Answer

The answer of Summarize the three steps for identifying who...

Question 6

In a single day, Josephine can produce 10 hot dogs, and Abigail can produce five hot dogs. Therefore, _____ has a(n) _____ advantage in making hot dogs.

Accepted Answer

A) Josephine; comparative 
B) Josephine; absolute 
C) Abigail; comparative 
D) Abigail; absolute 
A) Josephine; comparative 
B) Josephine; absolute 
C) Abigail; comparative 
D) Abigail; absolute

Question 7

If they bake only muffins, in a single day, Gregory can bake 10 muffins, and Gabriella can bake five muffins. If they bake only cookies, in a single day, Gregory can bake 10 cookies, and Gabriella can bake four cookies. We know that _____ has an absolute advantage and a comparative advantage in baking _____.

Accepted Answer

A) Gregory; muffins 
B) Gregory; cookies 
C) Gabriella; muffins 
D) Gabriella; cookies 
A) Gregory; muffins 
B) Gregory; cookies 
C) Gabriella; muffins 
D) Gabriella; cookies

Question 8

(Table: Matcha Tea and Coho Salmon Production Possibilities II) Use Table: Matcha Tea and Coho Salmon Production Possibilities II. This table shows the maximum amounts of matcha tea and Coho salmon, both measured in pounds, that Oregon and Washington can produce if each produces just one good. Oregon has an absolute advantage in the production of:
?
?
 $$\begin{array}{l}
\text { Table: Matcha Tea and Coho Salmon }\
\begin{array} { | l | l | l | } 
\hline & \text { Matcha Tea } & \text { Coho Salmon } \
\hline \text { Oregon } & 40 & 20 \
\hline \text { Washington } & 10 & 10 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) matcha tea only. 
B) Coho salmon only. 
C) both matcha tea and Coho salmon. 
D) neither matcha tea nor Coho salmon. 
A) matcha tea only. 
B) Coho salmon only. 
C) both matcha tea and Coho salmon. 
D) neither matcha tea nor Coho salmon.

Question 9

(Table: Comparative Advantage for Asha and Sabra) Data for Asha and Sabra are given in the table. Which statement explains who has the comparative advantage in making a sandwich? $$\begin{array}{l}
\text { Asha and Sabra make sandwiches }\
\begin{array} { | l | l | l | } 
\hline & \begin{array} { l } 
\text { Minutes to make a } \
\text { sandwich }
\end{array} & \begin{array} { l } 
\text { Number of carrots that couild be sliced into carrot } \
\text { sticks in time it takes to make a sandwich. }
\end{array} \
\hline \text { Asha } & 10 & 3 \
\hline \text { Sabra } & 13 & 2 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) Asha, she can make a sandwich in 10 minutes. 
B) Sabra, as she can make a sandwich in 13 minutes. 
C) Asha, she gives up slicing three carrots into carrot sticks every time she makes a sandwich. 
D) Sabra, she gives up slicing two carrots into carrot sticks every time she makes a sandwich. 
A) Asha, she can make a sandwich in 10 minutes. 
B) Sabra, as she can make a sandwich in 13 minutes. 
C) Asha, she gives up slicing three carrots into carrot sticks every time she makes a sandwich. 
D) Sabra, she gives up slicing two carrots into carrot sticks every time she makes a sandwich.

Question 10

Chanda can change the oil in a particular car in 30 minutes. It takes 45 minutes for Deepa to change the oil in the same type of car. Which of the following statements is TRUE?

Accepted Answer

A) Chanda has an absolute advantage over Deepa in changing the oil. 
B) Deepa has an absolute advantage over Chanda in changing the oil. 
C) Chanda has a comparative advantage over Deepa in changing the oil. 
D) Deepa has a comparative advantage over Chanda in changing the oil. 
A) Chanda has an absolute advantage over Deepa in changing the oil. 
B) Deepa has an absolute advantage over Chanda in changing the oil. 
C) Chanda has a comparative advantage over Deepa in changing the oil. 
D) Deepa has a comparative advantage over Chanda in changing the oil.

Question 11

(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.
What is Jason's opportunity cost for sorting and folding a load of laundry?

Accepted Answer

A) 0.5 of a car will not be washed. 
B) Two cars will not be washed. 
C) 45 minutes will be given up. 
D) 90 minutes will be given up. 
A) 0.5 of a car will not be washed. 
B) Two cars will not be washed. 
C) 45 minutes will be given up. 
D) 90 minutes will be given up.

Question 12

What is the basic idea behind comparative advantage?

Accepted Answer

The answer of What is the basic idea behind comparative...

Question 13

Why would a company set up internal markets?

Accepted Answer

A) To reduce the price that it pays to acquire resources for producing its product. 
B) To keep all profits within the company. 
C) To allocate the company's resources more efficiently. 
D) To ensure demand for its output. 
A) To reduce the price that it pays to acquire resources for producing its product. 
B) To keep all profits within the company. 
C) To allocate the company's resources more efficiently. 
D) To ensure demand for its output.

Question 14

Harvey pays $8 to skate at the indoor ice rink once a month. The price rises to $10, and Harvey starts skating once every six weeks. This is an example of price functioning as

Accepted Answer

A) a bundle of information. 
B) a signal. 
C) a challenge. 
D) an incentive. 
A) a bundle of information. 
B) a signal. 
C) a challenge. 
D) an incentive.

Question 15

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

Accepted Answer

A) an incentive. 
B) an advertisement. 
C) a signal. 
D) a bundle of information. 
A) an incentive. 
B) an advertisement. 
C) a signal. 
D) a bundle of information.

Question 16

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

Accepted Answer

A) a signal. 
B) an incentive. 
C) a bundle of information. 
D) a producer. 
A) a signal. 
B) an incentive. 
C) a bundle of information. 
D) a producer.

Question 17

Economists generally believe that a person should specialize in the production of a good or service if:

Accepted Answer

A) their production possibility frontier is further from the origin than that of any other person. 
B) their production possibility frontier is closer to the origin than that of any other person. 
C) they can produce the product using more resources than any other person. 
D) they can produce the product while forgoing fewer alternative products than any other person. 
A) their production possibility frontier is further from the origin than that of any other person. 
B) their production possibility frontier is closer to the origin than that of any other person. 
C) they can produce the product using more resources than any other person. 
D) they can produce the product while forgoing fewer alternative products than any other person.

Question 18

When a country's production mix becomes more specialized due to increased international trade based on comparative advantage

Accepted Answer

A) some industries in the country will shrink and possibly disappear. 
B) all industries in the country will grow as the economy grows from the trade. 
C) the losses in industries without comparative advantage will offset the gains from trade. 
D) the country will find it has less need for trade in the future. 
A) some industries in the country will shrink and possibly disappear. 
B) all industries in the country will grow as the economy grows from the trade. 
C) the losses in industries without comparative advantage will offset the gains from trade. 
D) the country will find it has less need for trade in the future.

Question 19

When price changes act as a line of communication between buyers and sellers, price is functioning as

Accepted Answer

A) an incentive. 
B) a producer. 
C) an information aggregator. 
D) a signal. 
A) an incentive. 
B) a producer. 
C) an information aggregator. 
D) a signal.

Question 20

Comparative advantage is about _____ resources to _____.

Accepted Answer

A) increasing the amount of; their highest-cost uses 
B) increasing the productivity of; less labor-intensive production 
C) investing in; higher-quality production 
D) reallocating; their better uses 
A) increasing the amount of; their highest-cost uses 
B) increasing the productivity of; less labor-intensive production 
C) investing in; higher-quality production 
D) reallocating; their better uses

Exam 8: Gains From Trade

The price of firewood rises, which encourages Marcella to buy less firewood. Price is functioning as

When trade is based on comparative advantage

The principle of comparative advantage applies to interactions

Summarize the three steps for identifying who has a comparative advantage in a task.

In a single day, Josephine can produce 10 hot dogs, and Abigail can produce five hot dogs. Therefore, _____ has a(n) _____ advantage in making hot dogs.

Chanda can change the oil in a particular car in 30 minutes. It takes 45 minutes for Deepa to change the oil in the same type of car. Which of the following statements is TRUE?

(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. What is Jason's opportunity cost for sorting and folding a load of laundry?

What is the basic idea behind comparative advantage?

Why would a company set up internal markets?

Harvey pays $8 to skate at the indoor ice rink once a month. The price rises to $10, and Harvey starts skating once every six weeks. This is an example of price functioning as

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

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

Economists generally believe that a person should specialize in the production of a good or service if:

When a country's production mix becomes more specialized due to increased international trade based on comparative advantage

When price changes act as a line of communication between buyers and sellers, price is functioning as

Comparative advantage is about _____ resources to _____.

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Sizing up the Economy Using Gdp

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Aggregate Demand and Aggregate Supply

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

In a single day, Josephine can produce 10 hot dogs, and Abigail can produce five hot dogs. Therefore, _ has a(n) _ advantage in making hot dogs.

Comparative advantage is about _ resources to _.