CHAPTER 33: Production
MULTIPLE CHOICE
1. Suppose that in Problem 1, Tip can write 5 pages of term papers or solve 10 workbook problems in an
hour, while Spot can write 2 pages of term papers or solve 2 workbook problems in an hour. If they
each decide to work a total of 6 hours and to share their output, then if they produce as many pages of
term paper as possible given that they produce 25 workbook problems,
a.
Spot will spend all of his time writing term papers and Tip will spend some time at each
task.
b.
Tip will spend all of his time writing term papers and Spot will spend some time at each
task.
c.
both students will spend some time at each task.
d.
Spot will write term papers only and Tip will do workbook problems only.
e.
Tip will write term papers only and Spot will do workbook problems only.
2. Suppose that in Problem 1, Tip can write 3 pages of term papers or solve 12 workbook problems in an
hour, while Spot can write 4 pages of term papers or solve 12 workbook problems in an hour. If they
each decide to work a total of 7 hours and to share their output, then if they produce as many pages of
term paper as possible given that they produce 18 workbook problems,
a.
Spot will write term papers only and Tip will do workbook problems only.
b.
Tip will spend all of his time writing term papers and Spot will spend some time at each
task.
c.
Spot will spend all of his time writing term papers and Tip will spend some time at each
task.
d.
both students will spend some time at each task.
e.
Tip will write term papers only and Spot will do workbook problems only.
3. Suppose that in Problem 1, Tip can write 3 pages of term papers or solve 6 workbook problems in an
hour, while Spot can write 3 pages of term papers or solve 3 workbook problems in an hour. If they
each decide to work a total of 6 hours and to share their output, then if they produce as many pages of
term paper as possible given that they produce 15 workbook problems,
a.
Spot will write term papers only and Tip will do workbook problems only.
b.
both students will spend some time at each task.
c.
Spot will spend all of his time writing term papers and Tip will spend some time at each
task.
d.
Tip will spend all of his time writing term papers and Spot will spend some time at each
task.
e.
Tip will write term papers only and Spot will do workbook problems only.
4. Suppose that in Problem 1, Tip can write 4 pages of term papers or solve 8 workbook problems in an
hour, while Spot can write 5 pages of term papers or solve 15 workbook problems in an hour. If they
each decide to work a total of 5 hours and to share their output, then if they produce as many pages of
term paper as possible given that they produce 16 workbook problems,
a.
Spot will spend all of his time writing term papers and Tip will spend some time at each
task.
b.
Spot will write term papers only and Tip will do workbook problems only.
c.
both students will spend some time at each task.
d.
Tip will spend all of his time writing term papers and Spot will spend some time at each
task.
e.
Tip will write term papers only and Spot will do workbook problems only.
5. Suppose that in Problem 1, Tip can write 4 pages of term papers or solve 4 workbook problems in an
hour, while Spot can write 5 pages of term papers or solve 15 workbook problems in an hour. If they
each decide to work a total of 6 hours and to share their output, then if they produce as many pages of
term paper as possible given that they produce 20 workbook problems,
a.
both students will spend some time at each task.
b.
Spot will write term papers only and Tip will do workbook problems only.
c.
Spot will spend all of his time writing term papers and Tip will spend some time at each
task.
d.
Tip will spend all of his time writing term papers and Spot will spend some time at each
task.
e.
Tip will write term papers only and Spot will do workbook problems only.
6. Al and Bill are the only workers in a small factory that makes geegaws and doodads. Al can make 6
geegaws per hour or 18 doodads per hour. Bill can make 3 geegaws per hour or 12 doodads per hour.
Assuming that neither of them finds one task more odious than the other,
a.
Al has a comparative advantage in producing geegaws and Bill has a comparative
advantage in producing doodads.
b.
Bill has a comparative advantage in producing geegaws and Al has a comparative
advantage in producing doodads.
c.
Al has a comparative advantage in producing both geegaws and doodads.
d.
Bill has a comparative advantage in producing both geegaws and doodads.
e.
both have a comparative advantage in producing doodads.
7. Al and Bill are the only workers in a small factory that makes geegaws and doodads. Al can make 5
geegaws per hour or 20 doodads per hour. Bill can make 3 geegaws per hour or 6 doodads per hour.
Assuming that neither of them finds one task more odious than the other,
a.
Bill has a comparative advantage in producing both geegaws and doodads.
b.
Al has a comparative advantage in producing geegaws and Bill has a comparative
advantage in producing doodads.
c.
Al has a comparative advantage in producing both geegaws and doodads.
d.
Bill has a comparative advantage in producing geegaws and Al has a comparative
advantage in producing doodads.
e.
both have a comparative advantage in producing doodads.
8. Al and Bill are the only workers in a small factory that makes geegaws and doodads. Al can make 7
geegaws per hour or 14 doodads per hour. Bill can make 4 geegaws per hour or 24 doodads per hour.
Assuming that neither of them finds one task more odious than the other,
a.
Bill has a comparative advantage in producing geegaws and Al has a comparative
advantage in producing doodads.
b.
Bill has a comparative advantage in producing both geegaws and doodads.
c.
Al has a comparative advantage in producing both geegaws and doodads.
d.
Al has a comparative advantage in producing geegaws and Bill has a comparative
advantage in producing doodads.
e.
both have a comparative advantage in producing doodads.
9. Al and Bill are the only workers in a small factory that makes geegaws and doodads. Al can make 5
geegaws per hour or 10 doodads per hour. Bill can make 4 geegaws per hour or 24 doodads per hour.
Assuming that neither of them finds one task more odious than the other,
a.
Bill has a comparative advantage in producing geegaws and Al has a comparative
advantage in producing doodads.
b.
Bill has a comparative advantage in producing both geegaws and doodads.
c.
Al has a comparative advantage in producing geegaws and Bill has a comparative
advantage in producing doodads.
d.
Al has a comparative advantage in producing both geegaws and doodads.
e.
both have a comparative advantage in producing doodads.
10. Al and Bill are the only workers in a small factory that makes geegaws and doodads. Al can make 7
geegaws per hour or 21 doodads per hour. Bill can make 4 geegaws per hour or 8 doodads per hour.
Assuming that neither of them finds one task more odious than the other,
a.
Al has a comparative advantage in producing geegaws and Bill has a comparative
advantage in producing doodads.
b.
Bill has a comparative advantage in producing both geegaws and doodads.
c.
Al has a comparative advantage in producing both geegaws and doodads.
d.
Bill has a comparative advantage in producing geegaws and Al has a comparative
advantage in producing doodads.
e.
both have a comparative advantage in producing doodads.
11. (See Problem 5.) Every consumer has a red-money income and a blue-money income and each
commodity has a red price and a blue price. You can buy a good by paying for it either with blue
money at the blue price or with red money at the red price. Harold has 12 units of red money and 10
units of blue money to spend. The red price of ambrosia is 1 and the blue price of ambrosia is 2. The
red price of bubble gum is 1 and the blue price of bubble gum is 1. If ambrosia is on the horizontal
axis, and bubble gum on the vertical axis, then Harold’s budget set is bounded by
a.
two line segments, one running from (0, 22) to (12, 10) and another running from (12, 10)
to (17, 0).
b.
two line segments one running from (0, 22) to (5, 12) and the other running from (5, 12) to
(17, 0).
c.
two line segments, one running from (0, 15) to (12, 10) and the other running from (12,
10) to (24, 0).
d.
a vertical line segment and a horizontal line segment, intersecting at (12, 10).
e.
a vertical line segment and a horizontal line segment, intersecting at (5, 12).
12. (See Problem 5.) Every consumer has a red-money income and a blue-money income and each
commodity has a red price and a blue price. You can buy a good by paying for it either with blue
money at the blue price or with red money at the red price. Harold has 18 units of red money and 36
units of blue money to spend. The red price of ambrosia is 2 and the blue price of ambrosia is 6. The
red price of bubble gum is 1 and the blue price of bubble gum is 2. If ambrosia is on the horizontal
axis, and bubble gum on the vertical axis, then Harold’s budget set is bounded by
a.
two line segments one running from (0, 36) to (6, 18) and the other running from (6, 18) to
(15, 0).
b.
two line segments, one running from (0, 36) to (9, 18) and another running from (9, 18) to
(15, 0).
c.
two line segments, one running from (0, 24) to (9, 18) and the other running from (9, 18)
to (27, 0).
d.
a vertical line segment and a horizontal line segment, intersecting at (9, 18).
e.
a vertical line segment and a horizontal line segment, intersecting at (6, 18).
13. (See Problem 5.) Every consumer has a red-money income and a blue-money income and each
commodity has a red price and a blue price. You can buy a good by paying for it either with blue
money at the blue price or with red money at the red price. Harold has 16 units of red money and 42
units of blue money to spend. The red price of ambrosia is 2 and the blue price of ambrosia is 6. The
red price of bubble gum is 1 and the blue price of bubble gum is 2. If ambrosia is on the horizontal
axis, and bubble gum on the vertical axis, then Harold’s budget set is bounded by
a.
two line segments, one running from (0, 28) to (8, 21) and the other running from (8, 21)
to (24, 0).
b.
two line segments, one running from (0, 37) to (8, 21) and another running from (8, 21) to
(15, 0).
c.
two line segments one running from (0, 37) to (7, 16) and the other running from (7, 16) to
(15, 0).
d.
a vertical line segment and a horizontal line segment, intersecting at (8, 21).
e.
a vertical line segment and a horizontal line segment, intersecting at (7, 16).
14. (See Problem 5.) Every consumer has a red-money income and a blue-money income and each
commodity has a red price and a blue price. You can buy a good by paying for it either with blue
money at the blue price or with red money at the red price. Harold has 27 units of red money and 40
units of blue money to spend. The red price of ambrosia is 3 and the blue price of ambrosia is 8. The
red price of bubble gum is 1 and the blue price of bubble gum is 2. If ambrosia is on the horizontal
axis, and bubble gum on the vertical axis, then Harold’s budget set is bounded by
a.
two line segments one running from (0, 47) to (5, 27) and the other running from (5, 27) to
(14, 0).
b.
two line segments, one running from (0, 47) to (9, 20) and another running from (9, 20) to
(14, 0).
c.
a vertical line segment and a horizontal line segment, intersecting at (9, 20).
d.
two line segments, one running from (0, 25) to (9, 20) and the other running from (9, 20)
to (36, 0).
e.
a vertical line segment and a horizontal line segment, intersecting at (5, 27).
15. (See Problem 5.) Every consumer has a red-money income and a blue-money income and each
commodity has a red price and a blue price. You can buy a good by paying for it either with blue
money at the blue price or with red money at the red price. Harold has 40 units of red money and 35
units of blue money to spend. The red price of ambrosia is 4 and the blue price of ambrosia is 5. The
red price of bubble gum is 1 and the blue price of bubble gum is 1. If ambrosia is on the horizontal
axis, and bubble gum on the vertical axis, then Harold’s budget set is bounded by
a.
two line segments, one running from (0, 75) to (10, 35) and another running from (10, 35)
to (17, 0).
b.
a vertical line segment and a horizontal line segment, intersecting at (10, 35).
c.
two line segments one running from (0, 75) to (7, 40) and the other running from (7, 40) to
(17, 0).
d.
two line segments, one running from (0, 42) to (10, 35) and the other running from
(10, 35) to (50, 0).
e.
a vertical line segment and a horizontal line segment, intersecting at (7, 40).
16. (See Problem 2.) Robinson Crusoe has exactly 14 hours per day to spend gathering coconuts or
catching fish. He can catch 5 fish per hour or he can pick 20 coconuts per hour. His utility function is
U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates
his time in the best possible way between catching fish and picking coconuts, his consumption will be
the same as it would be if he could buy fish and coconuts in a competitive market where the price of
coconuts is $1, his income is
a.
$280 and the price of fish is $4.
b.
$70 and the price of fish is $5.
c.
$350 and the price of fish is $5.
d.
$280 and the price of fish is $.20.
e.
$175 and the price of fish is $.20.
17. (See Problem 2.) Robinson Crusoe has exactly 12 hours per day to spend gathering coconuts or
catching fish. He can catch 2 fish per hour or he can pick 4 coconuts per hour. His utility function is
U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates
his time in the best possible way between catching fish and picking coconuts, his consumption will be
the same as it would be if he could buy fish and coconuts in a competitive market where the price of
coconuts is $1, his income is
a.
$48 and the price of fish is $2.
b.
$48 and the price of fish is $.50.
c.
$24 and the price of fish is $2.
d.
$72 and the price of fish is $2.
e.
$36 and the price of fish is $.50.
18. (See Problem 2.) Robinson Crusoe has exactly 12 hours per day to spend gathering coconuts or
catching fish. He can catch 3 fish per hour or he can pick 12 coconuts per hour. His utility function is
U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates
his time in the best possible way between catching fish and picking coconuts, his consumption will be
the same as it would be if he could buy fish and coconuts in a competitive market where the price of
coconuts is $1, his income is
a.
$144 and the price of fish is $4.
b.
$144 and the price of fish is $.33.
c.
$36 and the price of fish is $3.
d.
$180 and the price of fish is $3.
e.
$90 and the price of fish is $.33.
19. (See Problem 2.) Robinson Crusoe has exactly 8 hours per day to spend gathering coconuts or catching
fish. He can catch 2 fish per hour or he can pick 8 coconuts per hour. His utility function is U(F, C) =
FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates his time
in the best possible way between catching fish and picking coconuts, his consumption will be the same
as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is
$1, his income is
a.
$64 and the price of fish is $4.
b.
$64 and the price of fish is $.50.
c.
$16 and the price of fish is $2.
d.
$80 and the price of fish is $2.
e.
$40 and the price of fish is $.50.
20. (See Problem 2.) Robinson Crusoe has exactly 8 hours per day to spend gathering coconuts or catching
fish. He can catch 4 fish per hour or he can pick 8 coconuts per hour. His utility function is U(F, C) =
FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates his time
in the best possible way between catching fish and picking coconuts, his consumption will be the same
as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is
$1, his income is
a.
$96 and the price of fish is $4.
b.
$64 and the price of fish is $.25.
c.
$32 and the price of fish is $4.
d.
$64 and the price of fish is $2.
e.
$48 and the price of fish is $.25.
21. On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There
are 1,000 acres of land. An acre of land will produce either 16 units of milk or 31 units of wheat. Some
citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions
of the form U(M, W) = MW. At every Pareto optimal allocation,
a.
the number of units of milk produced equals the number of units of wheat produced.
b.
total milk production is 8,000 units.
c.
all citizens consume the same commodity bundle.
d.
every consumer’s marginal rate of substitution between milk and wheat is −1.
e.
None of the above is true at every Pareto optimal allocation.
22. On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There
are 1,000 acres of land. An acre of land will produce either 10 units of milk or 16 units of wheat. Some
citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions
of the form U(M, W) = MW. At every Pareto optimal allocation,
a.
all citizens consume the same commodity bundle.
b.
total milk production is 5,000 units.
c.
every consumer’s marginal rate of substitution between milk and wheat is −1.
d.
the number of units of milk produced equals the number of units of wheat produced.
e.
None of the above is true at every Pareto optimal allocation.
23. On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There
are 1,000 acres of land. An acre of land will produce either 3 units of milk or 7 units of wheat. Some
citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions
of the form U(M, W) = MW. At every Pareto optimal allocation,
a.
the number of units of milk produced equals the number of units of wheat produced.
b.
all citizens consume the same commodity bundle.
c.
total milk production is 1,500 units.
d.
every consumer’s marginal rate of substitution between milk and wheat is −1.
e.
None of the above is true at every Pareto optimal allocation.
24. On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There
are 1,000 acres of land. An acre of land will produce either 13 units of milk or 33 units of wheat. Some
citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions
of the form U(M, W) = MW. At every Pareto optimal allocation,
a.
every consumer’s marginal rate of substitution between milk and wheat is −1.
b.
all citizens consume the same commodity bundle.
c.
the number of units of milk produced equals the number of units of wheat produced.
d.
total milk production is 6,500 units.
e.
None of the above is true at every Pareto optimal allocation.
25. On a certain island there are only two goods, wheat and milk. The only scarce resource is land. There
are 1,000 acres of land. An acre of land will produce either 7 units of milk or 37 units of wheat. Some
citizens have lots of land; some have just a little bit. The citizens of the island all have utility functions
of the form U(M, W) = MW. At every Pareto optimal allocation,
a.
total milk production is 3,500 units.
b.
the number of units of milk produced equals the number of units of wheat produced.
c.
every consumer’s marginal rate of substitution between milk and wheat is −1.
d.
all citizens consume the same commodity bundle.
e.
None of the above is true at every Pareto optimal allocation.