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8) The United States can use all its resources to produce 250 DVDs or 500 shoes. China can
use all of its resources to produce 30 DVDs or 300 shoes. The opportunity cost of producing
a DVD in the United States is
A) 2 shoes.
B) 1/2 of a shoe.
C) 20 shoes.
D) 500 shoes.
E) 1 DVD.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
9) In the table above, how many jackets must Mary forgo for every dress she makes?
A) 12 jackets
B) 3/4 of a jacket
C) 2/3 of a jacket
D) 1 1/2 jackets
E) 8 jackets
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
10) In the table above, how many jackets must Mark forgo for every dress he makes?
A) 1 jacket
B) 16 jackets
C) 2/3 of a jacket
D) 1 1/2 jackets
E) 24 dresses
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
61
11) In the above table, for Mary the opportunity cost of producing a dress is ________ and
the opportunity cost for Mark of producing a dress is ________.
A) 1 1/2 jackets; 2/3 of a jacket
B) 1 1/2 jackets; 2 1/2 jackets
C) 1 1/4 jackets; 1/2 of a jacket
D) 1 jacket; 1 jacket
E) 1 dress; 1 dress
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
12) A country has a comparative advantage in the production of a good if it can
A) produce more of the good than another country.
B) produce more of the good most eiciently.
C) produce the good on and remain on its production possibilities frontier.
D) trade of producing the good for another good.
E) produce the good at the lowest opportunity cost.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
13) Having a comparative advantage means a nation can
A) beneit from trade.
B) produce at a higher opportunity cost.
C) produce more of the good.
D) produce without incurring an opportunity cost.
E) produce the good at a point beyond its PPF.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
62
14) When a person has a comparative advantage in producing a good or service, the person
has
A) a higher opportunity cost in producing that product than someone else.
B) a constant opportunity cost in producing that product.
C) a decreasing opportunity cost in producing that product.
D) a lower opportunity cost in producing that product than someone else.
E) an increasing marginal beneit in producing the good.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
15) Which of the following best describes comparative advantage?
A) being able to produce more output than any other country
B) using the fewest number of resources to produce a given amount of output
C) having the largest number of resources compared to other countries
D) forgoing the fewest units of one product to produce a unit of another product
E) It is the same as absolute advantage.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
16) Which of the following is correct about comparative advantage?
A) Some countries will have a comparative advantage in everything.
B) Having a comparative advantage without an absolute advantage is impossible.
C) A comparative advantage in a good means that the country can produce more of the
good than any other country.
D) A country has a comparative advantage in the production of a good if it can produce the
good at lower opportunity cost than any other country.
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
63
17) John can make pizza at a lower opportunity cost than Allen, but Allen can make more
pizzas per day than John. Therefore,
A) John cannot beneit from trade with Allen.
B) Allen cannot beneit from trade with John.
C) John has a comparative advantage in pizza.
D) John has an absolute advantage in pizza.
E) Allen has a comparative advantage in pizza.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
18) Alice and Gene work in the mailroom, sorting and delivering mail. In order for them to
beneit from specialization and trade, Alice must
A) be able to both sort and deliver faster than Gene.
B) be equally productive in both sorting and delivering.
C) have a comparative advantage in both sorting and delivering.
D) have a comparative advantage in one task and Gene must have a comparative advantage
in the other task.
E) be equally productive as Gene in both sorting and delivering.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
19) When one person's opportunity cost of producing a good is lower than another person's
opportunity cost of producing the same good, it is called
A) an absolute advantage.
B) a comparative advantage.
C) specialization.
D) production possibilities.
E) a tradeof.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
64
20) For country Gamma the opportunity cost for producing 1 computer is 10 tons of steel.
For country Beta the opportunity cost for producing 1 computer is 6 tons of steel. Which
country has the comparative advantage in the production of steel?
A) Gamma
B) Beta
C) Both have the comparative advantage in the production of steel.
D) Neither country has the comparative advantage in the production of steel.
E) More information is needed to determine which of the two nations has the comparative
advantage.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
21) For country North, the opportunity cost incurred when 3 tractors are produced is 21
watches. For country South, the opportunity cost incurred when 5 tractors are produced is
100 watches. Which country has the comparative advantage in the production of tractors?
A) North
B) South
C) Both have the comparative advantage in the production of tractors.
D) Neither country has the comparative advantage in the production of tractors.
E) More information is needed about which country has the comparative advantage in the
production of watches.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
22) If Country A can produce an extra plane by giving up two boats, and Country B can
produce an extra plane by giving up three boats, then
A) Country A has a comparative advantage over Country B in the production of planes.
B) Country B has a comparative advantage over Country A in the production of planes.
C) The two countries have no incentive to trade with one another.
D) Country A would like to trade with B, but B cannot gain by trading with A.
E) Country A has an absolute advantage in producing planes and a comparative advantage
in producing boats.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
23) David takes 10 minutes to process a customer, and 20 minutes to stock the shelves.
Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which
of the following statements is true?
A) David has an absolute advantage in performing both tasks.
B) Danny has an absolute advantage in performing both tasks.
C) David has a comparative advantage in processing customers but not in stocking shelves.
D) Danny has a comparative advantage in processing customers but not in stocking
shelves.
E) Danny has a comparative advantage in processing customers and in stocking shelves.
65
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
24) Rika's opportunity cost of producing 100 t-shirts is 50 jackets. Jef's opportunity cost of
producing 75 t-shirts is 25 jackets. Who should specialize in jackets?
A) Rika
B) Jef
C) neither
D) both
E) More information is needed about their production possibilities frontiers to determine
who should specialize in jackets.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
25) On a typical acre of land, Iowa can produce either 300 pounds of beef or 100 pounds of
soybeans in a year. On a typical acre of land, Nebraska can produce 150 pounds of beef or
200 pounds of soybeans. Which of the following is correct?
A) Nebraska should produce soybeans because its opportunity cost of soybeans is lower.
B) Nebraska should produce soybeans because its opportunity cost of soybeans is higher.
C) Iowa should produce soybeans because its opportunity cost of soybeans is lower.
D) Iowa should produce soybeans because its opportunity cost of soybeans is higher.
E) Nebraska and Iowa should divide each acre evenly between soybean and beef
production.
Skill: Level 5: Critical thinking
Section: Checkpoint 3.4
Status: New
AACSB: Analytical thinking
66
26) Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of
potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, Huey's
opportunity cost of producing one pound of tomatoes is
A) 1.5 pounds of potatoes.
B) 0.66 pound of potatoes.
C) 0, because he has an absolute advantage in it.
D) 0, because he has a comparative advantage in it.
E) 1.0 pound of potatoes.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
27) Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of
potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, Steve has a
comparative advantage in
A) both potatoes and tomatoes.
B) neither potatoes nor tomatoes.
C) potatoes.
D) tomatoes.
E) More information is needed about Huey's comparative advantage in order to determine
Steve's comparative advantage.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
67
28) Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of
potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of
the following statements is correct?
A) Steve has an absolute advantage in both potatoes and tomatoes.
B) Steve has a comparative advantage in both potatoes and tomatoes.
C) Steve has an absolute advantage in potatoes only.
D) Huey has an absolute advantage in potatoes only.
E) Huey has an absolute advantage in both potatoes and tomatoes.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
29) If Tom can wax a car in fewer hours than Jerry, then Tom deinitely has
A) a comparative advantage in car waxing.
B) an absolute advantage in car waxing.
C) both a comparative and an absolute advantage in car waxing.
D) neither a comparative nor an absolute advantage in car waxing.
E) an undetermined advantage because we do not know how long it takes Tom and Jerry to
wash a car.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: New
AACSB: Analytical thinking
30) In the table above, Jack's opportunity cost for 1 pound of food is ________ and his
opportunity cost for 1 pound of clothing is ________.
A) 1 pound of clothing; 4 pounds of food
B) 1/2 of a pound of clothing; 2 pounds of food
C) 1/3 of a pound of clothing; 3 pounds of food
D) 2 pounds of clothing; 2 pounds of food
E) 1 pound of food; 1 pound of clothing
Skill: Level 4: Applying models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
31) In the table above, Jill's opportunity cost for 1 pound of food is ________ and her
opportunity cost for 1 pound of clothing is ________.
A) 1 pound of clothing; 4 pounds of food
B) 1/2 of a pound of clothing; 2 pounds of food
C) 1/3 of a pound of clothing; 3 pounds of food
68
D) 2 pounds of clothing; 2 pounds of food
E) 1 pound of food; 1 pound of clothing
Skill: Level 4: Applying models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
32) In the table above, Jack's comparative advantage is producing ________ and Jill's
comparative advantage is producing ________.
A) clothing; food
B) clothing and food; nothing
C) nothing; clothing and food
D) food; clothing
E) clothing; clothing
Skill: Level 4: Applying models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
69
33) Deb and Pete have volunteered to help their favorite charity mail out fundraiser
information. The igure above shows their production possibilities frontiers for assembling
packets and stuing envelopes. If Deb spends all her time assembling packets, how many
can she assemble?
A) 32
B) 40
C) 64
D) 160
E) 22
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
34) Deb and Pete have volunteered to help their favorite charity mail out fundraiser
information. The igure above shows their production possibilities frontiers for assembling
packets and stuing envelopes. What is Deb's opportunity cost of assembling 1 packet?
A) 160 envelopes
B) 40 envelopes
C) 4 envelopes
D) 1/4 of an envelope
E) 4 packets
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
35) Deb and Pete have volunteered to help their favorite charity mail out fundraiser
information. The igure above shows their production possibilities frontiers for assembling
packets and stuing envelopes. Which of the following statements is correct?
A) Deb has a comparative advantage in assembling packets.
70
