If Helen gives up the opportunity to bake 40 cakes for each room she paints and Josh can paint one room in the time it takes him to bake 60 cakes, which of the following is true?
a. The opportunity cost of painting is higher for Helen.
b. The opportunity cost of baking cakes is lower for Josh.
c. The opportunity cost of painting one room is 1/40 of a cake for Helen.
d. The opportunity cost of baking one cake is 60 rooms painted for Josh.
e. The opportunity cost of cakes cannot be computed.
QUESTION 2Eileen has a comparative advantage over Jan in piano tuning but not in shoe polishing. Therefore,
a. Jan must have an absolute advantage in piano tuning
b. Eileen must have an absolute advantage in shoe polishing
c. Jan must have a lower opportunity cost of shoe polishing
d. Eileen must have an absolute advantage in shoe polishing and in piano tuning
e. Eileen must have an absolute advantage in piano tuning
QUESTION 3If Sam can chop up more carrots per minute than Joe can, then
a. Joe has an absolute advantage in carrot chopping
b. Joe must have a comparative advantage in carrot chopping
c. Sam has an absolute advantage in carrot chopping
d. Sam must have a comparative advantage in carrot chopping
e. we can conclude nothing about absolute advantage
QUESTION 4A country has an absolute advantage in the production of a good if that country
a. can produce the good using fewer resources than another country would require
b. has the lowest opportunity cost of producing the good and can produce it with the fewest resources
c. has the lowest opportunity cost of producing the good regardless of whether it is produced with the fewest resources
d. has the greatest opportunity cost of producing the good regardless of whether it is produced with the fewest resources
e. has the greatest opportunity cost of producing the good and produces it with the fewest resources
QUESTION 5If one person has the absolute advantage in producing both of two goods, then that person
a. must also have a comparative advantage in both goods
b. cannot benefit from trade
c. cannot have a comparative advantage in either good
d. will have the comparative advantage in only one good
e. should specialize in the production of both goods
QUESTION 6If Robin has an absolute advantage in both gardening and baking when compared to Robert, then
a. Robin cannot benefit by trading with Robert
b. Robin can benefit by specializing in gardening if Robert specializes in baking
c. Robin can benefit by specializing in baking if Robert specializes in gardening
d. Robin and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what
e. neither Robin nor Robert can benefit from trading with the other
QUESTION 7If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning, then
a. Jeremy has a comparative advantage in cooking, and Margaret has a comparative advantage in cleaning
b. Jeremy has a comparative advantage in cleaning, and Margaret has a comparative advantage in cooking
c. we can conclude nothing about comparative advantage
d. Jeremy has a comparative advantage in cooking, but we can conclude nothing about Margaret
e. Margaret has a comparative advantage in cleaning, but we can conclude nothing about Jeremy
QUESTION 8If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria, then
a. Evan must also have a comparative advantage in cleaning and bookkeeping
b. Evan must have a comparative advantage in cleaning
c. Evan must have a comparative advantage in bookkeeping
d. Gloria has a comparative advantage in neither activity
e. we can conclude nothing about comparative advantage
QUESTION 9If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then
a. Monica must have an absolute advantage in baking
b. Monica must have an absolute advantage in sewing
c. George must have an absolute advantage in baking
d. George must have an absolute advantage in sewing
e. we can conclude nothing about absolute advantage
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