108: ECO Introduction to Economics Problem Set 2 Chapter 2 Professor: Eva Carceles-Poveda 1. To say that an individual possesses an absolute advantage in the production of software means that individual A. has a lower opportunity cost of producing software. B. can produce more and/or higher quality software in a given amount of time. C. was the first to create the software. D. charges the lowest price for software.
2. If a nation can produce a good more quickly than any other nation, that nation has a(n) A. comparative advantage. B. absolute advantage. C. relative advantage. D. specialization advantage.
3. If a nation has the lowest opportunity cost of producing a good, that nation has a(n) A. comparative advantage. B. absolute advantage. C. comparative and absolute advantage. D. absolute advantage and possibly a comparative advantage.
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4. Refer to the figure above. According to the data, Corey has an absolute advantage in A. the production of pizza. B. neither production of pizza nor delivering pizza. C. delivering pizza. D. both production of pizza and delivering pizza.. 5. Refer to the figure above. According to the data, Pat has an absolute advantage in A. the production of pizza. B. neither production of pizza nor delivering pizza. C. delivering pizza. D. both production of pizza and delivering pizza. 6. Refer to the figure above. Corey's opportunity cost of producing an extra pizza is delivering ______ pizzas. A. 2 B. 3/2 C. 2/3 D. 1/2
7. Refer to the figure above. Corey's opportunity cost of delivering an extra pizza is producing ______ pizzas. A. 6 B. 12 C. 2 D. 1/2 8. Refer to the figure above. Pat's opportunity cost of producing an extra pizza is delivering ______ pizzas. A. 3 B. 2 C. 3/2 D. 2/3 9. Refer to the figure above. Pat's opportunity cost of delivering an extra pizza is producing _____ pizzas. A. 12 B. 10 C. 3/2 D. 2/3
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10. Refer to the figure above. The comparative advantage for pizza production belongs to __________ and the comparative advantage for pizza delivery belongs to __________. A. Corey; Corey B. Pat; Pat C. Pat; Corey D. Corey; Pat 11. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______ A. pizza delivery; pizza production B. pizza production; pizza delivery C. neither; both
Lou and Alex live together and share household chores. They like to cook some meals ahead and eat leftovers. Suppose that in one hour Lou and Alex can do the following:
12. Which of the following is true? A. Lou has both an absolute and comparative advantage over Alex in both tasks. B. Alex has a comparative advantage over Lou in cleaning. C. Lou has a comparative advantage over Alex in cleaning. D. Lou has a comparative advantage over Alex in cooking.
13. Alex and Lou have worked out an efficient arrangement. Under that arrangement, Alex A. and Lou each spend a half hour on cooking and a half hour on cleaning. B. Alex spends all of his time on cleaning, while Lou does all the cooking. C. Lou does all of the cleaning and half of the cooking. D. Lou spends all of his time on cleaning, while Alex does all the cooking 14. For Alex, the opportunity cost of cleaning one room is ____ meal(s); for Lou the opportunity cost of cleaning one room is _____ meal(s). A. 4; 4 B. 1; 4/5 C. 1; 5/4 D. 3; 5
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15. Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore, A. Ginger should specialize in fishing because it is harder than gathering mangoes, and Maryann should specialize in gathering mangoes. B. Ginger should strike out on her own, because Maryann reduces their combined productivity. C. Maryann should specialize in the activity for which she has a comparative advantage. D. Ginger should specialize in the activity for which she has an absolute advantage.
16. In general, individuals and nations should specialize in producing those goods for which they have a(n) A. absolute advantage. B. comparative advantage. C. absolutely comparative advantage. D. absolute and comparative advantage.
17. The United States generally has a comparative advantage in the development of technology because of A. larger amounts of natural resources. B. a high concentration of the best research universities. C. tax incentives. D. the existence of patent law, which no other country provides. 18. The production possibilities curve shows A. the minimum production of one good for every possible production level of the other good. B. how increasing the inputs used for one good increases the production of the other good. C. the maximum production of one good for every possible production level of the other good. D. how increasing the production of one good allows production of the other good to also rise.
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19. Refer to the figure above. For Pat, the opportunity cost of removing one bag of trash is A. 25 bulbs not planted. B. 5 bulbs not planted. C. 10 bulbs not planted. D. one-fifth of a bulb not planted. 20. Refer to the figure above. For Chris, the opportunity to removing one bag of trash is A. 25 bulbs that don't get planted. B. 5 bulbs that don't get planted. C. 3 bulbs that don't get planted. D. One-third of a bulb that doesn't get planted.
21. Refer to the figure above. If Pat and Chris were to specialize in the task for which each has a comparative advantage, A. Chris would plant bulbs and Pat would haul out trash. B. Chris would haul out trash and Pat would plant bulbs. C. Pat and Chris would each spend one hour on each task. D. both would plant bulbs as they both have an absolute advantage in that task.
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