Question 1

What is the difference between income and wealth?

Accepted Answer

The answer of What is the difference between income and...

Question 2

Mexico has lower wages than the United States. Does this necessarily mean that it will have a comparative advantage in the production of everything compared to the United States?

Accepted Answer

The answer of Mexico has lower wages than the United...

Question 3

Critically evaluate the following statement. "If a country can produce a good using fewer inputs than other country then that means that country enjoys a comparative advantage."

Accepted Answer

The answer of Critically evaluate the following statement. "If a...

Question 4

Papa Ray owns a pizzeria. He is more efficient at making pizza than anyone he could hire. Does this mean that he should make all of the pizzas himself?

Accepted Answer

The answer of Papa Ray owns a pizzeria. He is...

Question 5

What are the implications for economic growth for countries specializing in consumer goods rather than capital goods? Assume that they cannot trade what they produce.

Accepted Answer

The answer of What are the implications for economic growth...

Question 6

List two things that can cause economic growth to occur.

Accepted Answer

The answer of List two things that can cause economic...

Question 7

What is meant by the marginal rate of transformation?

Accepted Answer

The answer of What is meant by the marginal rate...

Question 8

Explain the economic concept of opportunity cost.

Accepted Answer

The answer of Explain the economic concept of opportunity cost....

Question 9

If a comparative advantage implies that a country can produce a product at a lower opportunity cost than another country then why do we see two countries often trading the same goods? For instance, for most agricultural products the U.S. has a comparative advantage. Japan, one of America's largest trading partners has a comparative advantage in the production of most economy cars. Explain what is going on here when we still see the U.S. exporting cars to Japan and the U.S. importing some foods from Japan.

Accepted Answer

The answer of If a comparative advantage implies that a...

Question 10

Because of the quantity and quality of its resources, the U.S. has an absolute advantage in the production of many goods and services. Does this imply that the U.S. cannot benefit from trading with a developing country that has less productive ability? Why or why not?

Accepted Answer

The answer of Because of the quantity and quality of...

Question 11

Kathy and Amy paint pictures and do caricatures to sell to tourists. In one day, Kathy can either paint two pictures or do four caricatures. In one day, Amy can either paint three pictures or do three caricatures. For both Kathy and Amy, what is the opportunity cost of painting one picture? Who has the comparative advantage in painting pictures and who has the comparative advantage in doing caricatures? How might they be able to increase their total output?

Accepted Answer

The answer of Kathy and Amy paint pictures and do...

Question 12

Why does the opportunity cost of producing a good rise as more resources are devoted to producing that good?

Accepted Answer

The answer of Why does the opportunity cost of producing...

Question 13

Michael Jordan has more athletic ability than most individuals. Thus, he is more productive at most tasks involving physical skill. Explain why then, it is more efficient for Michael Jordan to pay someone else to mow his lawn.

Accepted Answer

The answer of Michael Jordan has more athletic ability than...

Question 14

Explain why the costs of most services like haircuts and college education have risen at a faster rate relative to the costs of manufactured goods?

Accepted Answer

The answer of Explain why the costs of most services...

Question 15

Why might an economist argue that it could be damaging to the economic growth of a nation if it focused mostly on the production of consumer goods?

Accepted Answer

The answer of Why might an economist argue that it...

Question 16

Evaluate the following statement. "The nation of Berundi has an absolute disadvantage in the production of everything compared to the United States. Therefore, the United States will have no reason to trade with Berundi".

Accepted Answer

The answer of Evaluate the following statement. "The nation of...

Question 17

Suppose you have saved $300. You can spend it on a new stereo or on a weekend skiing trip. What is the opportunity cost of going on the skiing trip?

Accepted Answer

The answer of Suppose you have saved $300. You can...

Question 18

Refer to the information provided in Scenario 1 below to answer the following questions.
SCENARIO 1: Consider the following data for the harvest of crabs versus the harvest of fish off the coast of Virginia in answering the following questions.
 
-Refer to Scenario 1. If this economy is currently producing 30 crabs and 40 fish how is it possible for it to produce more of both?

Accepted Answer

The answer of Refer to the information provided in Scenario...

Question 19

What is the opportunity cost of producing capital goods such as a new road?

Accepted Answer

The answer of What is the opportunity cost of producing...

Question 20

How does an individual know whether or not an investment in education is worthwhile?

Accepted Answer

The answer of How does an individual know whether or...

Exam 2: The Economic Problem: Scarcity and Choice