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61) "Comparative advantage" is deined as a situation in which one person can produce
A) more of all goods than another person.
B) more of a good than another person.
C) a good for a lower dollar cost than another person.
D) a good for a lower opportunity cost than another person.
E) all goods for lower opportunity costs than another person.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Relective thinking
62) Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20
pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Scott's
opportunity cost of producing 1 taco is
A) 1/2 of a pizza.
B) 1 pizza.
C) 2 pizzas.
D) 20 pizzas.
E) 2 tacos.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
63) Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20
pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Cindy's
opportunity cost of producing 1 taco is
A) 3/4 of a pizza.
B) 1 pizza.
C) 30 pizzas.
D) 40 pizzas.
E) 1 1/3 tacos.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
81
64) Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20
pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Based on these
data,
A) Cindy has a comparative advantage at producing tacos.
B) Scott has a comparative advantage at producing tacos.
C) Cindy and Scott have the same comparative advantage in producing tacos.
D) neither Cindy nor Scott has a comparative advantage in producing tacos.
E) Cindy and Scott have the same comparative advantage in producing pizzas.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
65) In one hour John can produce 20 loaves of bread or 16 cakes. In one hour Phyllis can
produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
A) Phyllis has a comparative advantage in producing bread.
B) John has a comparative advantage in producing cakes.
C) Phyllis has an absolute advantage in both goods.
D) John has an absolute advantage in both goods.
E) Phyllis has a comparative advantage in producing both cakes and bread.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
66) Comparative advantage is most closely related to which of the following concepts?
A) productivity
B) eiciency
C) opportunity cost
D) competition
E) fairness
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: New
AACSB: Relective thinking
82
67) If workers in Mexico produce fewer goods and services per hour than workers in the
United States in all areas of production, then
A) the United States will beneit from trade with Mexico, but Mexico will not.
B) Mexico will beneit from trade with the United States, but the United States will not.
C) neither Mexico nor the United States will beneit from trade with the other.
D) both the United States and Mexico will beneit from trade with the other.
E) it is unknown whether either country can beneit from trade with the other.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: New
AACSB: Relective thinking
83
3.5 Chapter Figures
1) The igure above shows a production possibilities frontier. In the igure, which of the
following combinations of the two goods cannot be produced with the current resources
and technology?
A) 2 million cell phones and 13 million DVDs
B) 4 million cell phones and 4 million DVDs
C) 1 million cell phones and 14 million DVDs
D) 3 million cell phones and 5 million DVDs
E) 5 million cell phones and no DVDs
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
84
2) The igure above shows a production possibilities frontier. In the igure, which of the
following combinations of the two goods are eicient?
A) 2 million cell phones and 13 million DVDs
B) 5 million cell phones and 15 million DVDs
C) no cell phones and 15 million DVDs
D) 4 million cell phones and 4 million DVDs
E) None of these combinations is eicient.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
3) The igure above shows a production possibilities frontier. In the igure, the economy
faces a tradeof when ________ cell phones and ________ DVDs. are produced.
A) 3 million; 9 million
B) 2 million; 9 million
C) 3 million; 8 million
D) 4.5 million; no
E) 5 million; 15 million
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
4) The igure above shows a production possibilities frontier. In the igure, when the
economy moves from point E to point D, what is the opportunity cost of a DVD?
A) 0.25 cell phones
B) 0.5 cell phones
C) 1 cell phone
D) 4 cell phones
E) zero
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
85
5) The igure above shows a production possibilities frontier. In the igure, when the
economy moves from point D to point C, the opportunity cost of producing one more DVD
________, and when it moves from point C to D, the opportunity cost of producing one more
cell phone ________.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
E) increases; remains the same
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
6) The igure above shows a production possibilities frontier. In the igure, when the
economy moves from point C to point B, what is the opportunity cost of a DVD?
A) 0.5 cell phones
B) 2 cell phones
C) 0.5 million cell phones
D) 2 million cell phones
E) zero
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
86
7) The igure above shows how the PPF for cell phones and new cell-phone factories can
expand. In the igure, if the economy produced 4 million cell phones using the resources
eiciently, the PPF would
A) expand, but not as far as shown in the igure.
B) not expand.
C) expand farther than shown in the igure.
D) expand along the vertical axis and not along the horizontal axis.
E) expand evenly along both axes.
Skill: Level 3: Using models
Section: Checkpoint 3.3
Status: Old
AACSB: Analytical thinking
8) The igure above shows how the PPF for cell phones and new cell-phone factories can
expand. In the igure, if the economy chose the point on this year's PPF that is above point
K, the next year's PPF would
A) shift outward along the horizontal axis farther than the new PPF shown in the igure.
B) shift outward along the horizontal axis, but not as far as the new PPF shown in the
igure.
C) shift outward along the vertical axis, not along the horizontal axis.
D) shift inward along the horizontal axis.
E) shift inward along the vertical axis.
Skill: Level 3: Using models
Section: Checkpoint 3.3
Status: Old
AACSB: Analytical thinking
87
9) The igure above shows how the PPF for cell phones and new cell-phone factories can
expand. In the igure, if the economy chose the point on this year's PPF that is below point
K, the next year's PPF would
A) shift outward along the horizontal axis farther than the new PPF shown in the igure.
B) shift outward along the horizontal axis, but not as far as the new PPF shown in the
igure.
C) shift outward along the vertical axis, not along the horizontal axis.
D) shift inward along the horizontal axis.
E) shift inward along the vertical axis.
Skill: Level 3: Using models
Section: Checkpoint 3.3
Status: Old
AACSB: Analytical thinking
88
The igure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
10) Liz has a comparative advantage in ________ and an absolute advantage in ________.
A) smoothies only; both goods
B) smoothies only; smoothies only
C) both goods; both goods
D) salads only; both goods
E) salads only; salads only
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
89
11) Liz has a comparative advantage in ________ because ________.
A) smoothies; her opportunity cost of producing smoothies is lower than Joe's
B) salads; her opportunity cost of producing salads is lower than Joe's
C) smoothies; she can produce more smoothies per hour than Joe can
D) salads; she can produce more salads per hour than Joe can
E) both goods; she can produce more of both goods per hour than Joe can
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
12) Given the information in the igure above, Liz ________ beneit from trade with Joe
because ________.
A) can; each of them has a comparative advantage in one of the goods
B) can; each of them has an absolute advantage in one of the goods
C) cannot; she has an absolute advantage in both goods
D) cannot; she has a comparative advantage in both goods
E) can; Joe is more productive in producing one of the goods
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
13) Given the information in the igure above, Joe can beneit from trade as far as the price
at which he buys Liz's smoothies is
A) below 5 salads per smoothie.
B) not higher than 2 salads per smoothie.
C) not lower than 2 salads per smoothie.
D) not lower than 1 salad per smoothie.
E) not higher than 4 salads per smoothie.
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Analytical thinking
90
