Question 1

A person that has the _____ opportunity cost of producing a particular good is said to have _____.

Accepted Answer

A) lowest; an absolute advantage in the production of that good 
B) lowest; a comparative advantage in the production of that good 
C) highest; a production possibility frontier 
D) highest; increasing opportunity costs in the production of that good 
A) lowest; an absolute advantage in the production of that good 
B) lowest; a comparative advantage in the production of that good 
C) highest; a production possibility frontier 
D) highest; increasing opportunity costs in the production of that good

Question 2

Trade can be beneficial to trading partners because:

Accepted Answer

A) it results in a more inefficient use of resources overall. 
B) it enables more goods and services to be obtained at a lower opportunity cost. 
C) it prevents specialization in activities in which countries have a comparative advantage. 
D) it eliminates unemployment. 
A) it results in a more inefficient use of resources overall. 
B) it enables more goods and services to be obtained at a lower opportunity cost. 
C) it prevents specialization in activities in which countries have a comparative advantage. 
D) it eliminates unemployment.

Question 3

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry.
Which statement explains who has a comparative advantage in cooking lasagna?

Accepted Answer

A) Marla because she has a lower opportunity cost than Jason. 
B) Jason because he has a lower opportunity cost than Marla. 
C) Marla because she can cook lasagna faster than Jason. 
D) Jason because he can cook lasagna faster than Marla. 
A) Marla because she has a lower opportunity cost than Jason. 
B) Jason because he has a lower opportunity cost than Marla. 
C) Marla because she can cook lasagna faster than Jason. 
D) Jason because he can cook lasagna faster than Marla.

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 ironing a dress shirt, Bruno's opportunity cost is _____, and Sasha's opportunity cost is _____.

Accepted Answer

A) .6 of a tire changed; .67 of a tire changed 
B) .67 of a tire changed; .6 of a tire changed 
C) 1.67 tires changed; 1.5 tires changed 
D) 1.5 tires changed; 1.67 tires changed 
A) .6 of a tire changed; .67 of a tire changed 
B) .67 of a tire changed; .6 of a tire changed 
C) 1.67 tires changed; 1.5 tires changed 
D) 1.5 tires changed; 1.67 tires changed

Question 5

Which of the following will NOT happen if a country increases trade based on comparative advantage?

Accepted Answer

A) Some industries will grow, and others will shrink. 
B) Overall, the country will have an increase in welfare. 
C) Production in the country will become more specialized. 
D) Some countries involved in the trade will have a loss in welfare. 
A) Some industries will grow, and others will shrink. 
B) Overall, the country will have an increase in welfare. 
C) Production in the country will become more specialized. 
D) Some countries involved in the trade will have a loss in welfare.

Question 6

Why is comparative advantage NOT based on who does a task best?

Accepted Answer

The answer of Why is comparative advantage NOT based on...

Question 7

Which of the following is NOT an example of the allocating function of markets?

Accepted Answer

A) When the price of tomatoes rises, Jose buys fewer tomatoes. 
B) Sunil gets a job to save for a car. 
C) Nina knits a sweater and gives it to her niece. 
D) Penina buys gas at the station with the lowest price. 
A) When the price of tomatoes rises, Jose buys fewer tomatoes. 
B) Sunil gets a job to save for a car. 
C) Nina knits a sweater and gives it to her niece. 
D) Penina buys gas at the station with the lowest price.

Question 8

Amy must give up the production of 100 ties to produce 50 additional dress shirts. The opportunity cost of producing four dress shirts is _____ ties.

Accepted Answer

A) 4 
B) 8 
C) 16 
D) 79 
A) 4 
B) 8 
C) 16 
D) 79

Question 9

When price functions as a signal, it

Accepted Answer

A) inspires buyers and sellers to change behavior. 
B) aggregates information on the market in one measure. 
C) strengthens a buyer's or seller's position in the market. 
D) creates a line of communication between buyers and sellers. 
A) inspires buyers and sellers to change behavior. 
B) aggregates information on the market in one measure. 
C) strengthens a buyer's or seller's position in the market. 
D) creates a line of communication between buyers and sellers.

Question 10

Katie is much faster than her husband, Brett, at putting up a tent and starting a fire. Who should take care of these tasks on their camping trip if they want to maximize their time sitting around a campfire?

Accepted Answer

A) They each have a comparative advantage in a particular task, and they should focus on doing that. Katie can help Brett when she finishes her task. 
B) They should complete both tasks together, sharing all the work. 
C) Katie should complete both tasks because she is a more efficient worker. Brett could watch and learn from her. 
D) Katie should be in charge, directing the work while Brett does it. 
A) They each have a comparative advantage in a particular task, and they should focus on doing that. Katie can help Brett when she finishes her task. 
B) They should complete both tasks together, sharing all the work. 
C) Katie should complete both tasks because she is a more efficient worker. Brett could watch and learn from her. 
D) Katie should be in charge, directing the work while Brett does it.

Question 11

People are capable of completing many different tasks, each person's comparative advantage is in the particular task that they

Accepted Answer

A) can do better than anyone else. 
B) enjoy doing the most. 
C) can produce more of than any other task. 
D) are least bad at doing, relative to other tasks. 
A) can do better than anyone else. 
B) enjoy doing the most. 
C) can produce more of than any other task. 
D) are least bad at doing, relative to other tasks.

Question 12

(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. Washington 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 13

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in manicures?

Accepted Answer

A) Barlow because he is faster. 
B) Rusia because she is faster. 
C) Barlow because he has a lower opportunity cost. 
D) Rusia because she has a lower opportunity cost. 
A) Barlow because he is faster. 
B) Rusia because she is faster. 
C) Barlow because he has a lower opportunity cost. 
D) Rusia because she has a lower opportunity cost.

Question 14

(Table: Matcha Tea and Coho Salmon Production Possibilities) Use Table: Matcha Tea and Coho Salmon Production Possibilities. The table shows the maximum amounts of matcha tea and Coho salmon that Oregon and Washington can produce if each produces just one good. The opportunity cost of producing 1 unit of matcha tea for Oregon is _____ Coho salmon.
?
?
 $${ \text { Table: Matcha Tea and Coho Salmon } } \
\begin{array} { | l | l | l | } 
\hline & \text { Matcha Tea } & \text { Coho Salmon } \
\hline \text { Oregon } & 40 & 20 \
\hline \text { Washington } & 10 & 10 \
\hline
\end{array}$$

Accepted Answer

A) 2 
B) 0.25 
C) 1 
D) 0.5 
A) 2 
B) 0.25 
C) 1 
D) 0.5

Question 15

(Table: Four persons) The table lists the minutes that it will take four people to wash a car and to sort and fold a load of laundry. Use the data to answer the question.
Who has a comparative advantage in washing a car?

Accepted Answer

A) Asad 
B) Junko 
C) Jason 
D) Jen 
A) Asad 
B) Junko 
C) Jason 
D) Jen

Question 16

To get maximum output, you should allocate each task to the person who:

Accepted Answer

A) can do the task with the smallest amount of input. 
B) can do the task with the lowest opportunity cost. 
C) has an absolute advantage in completing the task. 
D) has a cost advantage in completing the task. 
A) can do the task with the smallest amount of input. 
B) can do the task with the lowest opportunity cost. 
C) has an absolute advantage in completing the task. 
D) has a cost advantage in completing the task.

Question 17

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

Accepted Answer

A) Prices aggregate information. 
B) Prices have purchasing power. 
C) Prices are signals. 
D) Prices create incentives. 
A) Prices aggregate information. 
B) Prices have purchasing power. 
C) Prices are signals. 
D) Prices create incentives.

Question 18

(Table: Mugs and Baseballs) Use Table: Mugs and Baseballs. Charlotte and Bernard make mugs and kites. Who has the comparative advantage in producing kites?
​
​

Accepted Answer

A) Charlotte 
B) Bernard 
C) both 
D) neither 
A) Charlotte 
B) Bernard 
C) both 
D) neither

Question 19

What concept would a factory manager make use of to assign tasks if he wants to maximize output and has a fixed amount of resources?

Accepted Answer

A) Opportunity revenues 
B) Trade incentives 
C) Absolute advantage 
D) Comparative advantage 
A) Opportunity revenues 
B) Trade incentives 
C) Absolute advantage 
D) Comparative advantage

Question 20

What is the basis of specialization?

Accepted Answer

A) Absolute advantage 
B) Comparative advantage 
C) Trade enhancement 
D) Incentive enhancement 
A) Absolute advantage 
B) Comparative advantage 
C) Trade enhancement 
D) Incentive enhancement

Exam 8: Gains From Trade

A person that has the _____ opportunity cost of producing a particular good is said to have _____.

Trade can be beneficial to trading partners because:

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry. Which statement explains who has a comparative advantage in cooking lasagna?

Which of the following will NOT happen if a country increases trade based on comparative advantage?

Why is comparative advantage NOT based on who does a task best?

Which of the following is NOT an example of the allocating function of markets?

Amy must give up the production of 100 ties to produce 50 additional dress shirts. The opportunity cost of producing four dress shirts is _____ ties.

When price functions as a signal, it

Katie is much faster than her husband, Brett, at putting up a tent and starting a fire. Who should take care of these tasks on their camping trip if they want to maximize their time sitting around a campfire?

People are capable of completing many different tasks, each person's comparative advantage is in the particular task that they

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in manicures?

(Table: Four persons) The table lists the minutes that it will take four people to wash a car and to sort and fold a load of laundry. Use the data to answer the question. Who has a comparative advantage in washing a car?

To get maximum output, you should allocate each task to the person who:

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

(Table: Mugs and Baseballs) Use Table: Mugs and Baseballs. Charlotte and Bernard make mugs and kites. Who has the comparative advantage in producing kites? ​ ​

What concept would a factory manager make use of to assign tasks if he wants to maximize output and has a fixed amount of resources?

What is the basis of specialization?

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

A person that has the _ opportunity cost of producing a particular good is said to have _.

(Table: Mugs and Baseballs) Use Table: Mugs and Baseballs. Charlotte and Bernard make mugs and kites. Who has the comparative advantage in producing kites?