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Exam 2: Comparative Advantage

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Question 1

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Refer to the accompanying figure. If this restaurant goes from producing 20 to 25 pizzas per hour, then which of the following statements is true?

A) It has to give up exactly 25 salads.
B) It has to give up more than 12.5 salads.
C) It has to give up exactly 12.5 salads.
D) It has to give up fewer than 12.5 salads.

E) A) and B)
F) A) and C)

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Question 2

Multiple Choice

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If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:

A) inefficient point.
B) efficient point.
C) unattainable point.
D) undesirable point.

E) All of the above
F) B) and D)

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Question 3

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If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. Suppose that Ana and Leo decide to work together as a team. Can they produce 2 pounds of fudge and 4.5 pounds of toffee each hour?

The downward slope of the production possibilities curve illustrates the:

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.   Relative to point X, at point Y:

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a:

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.   Point T is:

According to the accompanying table, Martha has the absolute advantage in making: $\begin{array} { | l | c | c | } \hline & \text { Time ta Make a Pie } & \text { Tirne to Muke a Cake } \\\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \\\hline \text { Julia } & 50 \text { minutes } & 60 \text {minutes } \\\hline\end{array}$  

If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. What is Leo's opportunity cost of making a pound of fudge?

You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:

You are the Minister of Trade for a small island country with the following annual PPC: You are negotiating a trade agreement with a neighboring island with the following annual PPC:   As soon as you see the other island's PPC, you realize there are:

If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. Which of the following statements is correct?

Refer to the accompanying figure. For Chris, the opportunity cost of planting one bulb is removing:     

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.   Point U is:

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: $\begin{array}{l|r|r|r}\hline & \text { Cars Sold } & \text { Trucks Sold } \\\hline \text { Larry } & 10 & 5 \\\hline \text { Joe } & 9 & 9 \\\hline \text { Ralph } & 3 & 12 \\\hline\end{array}$   Based on last month's data, ________ has an absolute advantage in selling cars and ________ has an absolute advantage in selling trucks.

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. What is the opportunity cost to Cathy of making a cake?

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The accompanying table shows the number of rooms they can each clean and the number of meals they can each cook in an hour. $\begin{array} { | l | c | c | } \hline & \text { Ronrs Cleaned Per Haur } & \text { Meals Caked Per Haur } \\\hline \text { Lou } & 5 & 4 \\\hline \text { Alex } & 3 & 3 \\\hline\end{array}$ Which of the following is true?

Refer to the accompanying figure. Growing 1,000 bushels of wheat and no bushels of corn each year is:

Refer to the accompanying table. Julia's opportunity cost of making a cake is: $\begin{array} { | l | c | c | } \hline & \text { Time ta Make a Pie } & \text { Tirne to Muke a Cake } \\\hline \text { Martha } & 60 \text { minutes} & 80 \text { minutes } \\\hline \text { Julia } & 50 \text { minutes} & 60 \text { minutes} \\\hline\end{array}$  

If country A can produce more of practically everything than can country B, then which of the following statements is true?