None 1. Lamya has a comparative advantage in writing a term paper if sheA. can write a paper faster than the other students in class.B. has an absolute advantage in writing a term paper.C. always earns an A on her papers.D. has a low opportunity cost for writing a term paper.2. Ghadah and Maryam are lost in the jungle, where the only things to eat are mangoes and fish.Ghadah can gather mangoes faster than Maryam and can also catch more fish per hour than canMaryam. Therefore,A. Ghadah should specialize in fishing because it is harder than gathering mangoes, and Maryamshould specialize in gathering mangoes.B. Ghadah should strike out on her own, because Maryam reduces their combined productivity.C. Maryam should specialize in the activity for which she has a comparative advantage.D. Ghadah should specialize in the activity for which she has an absolute advantage.3. Point A on a linear production possibilities curve represents a combination of 12 coffees and 3cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on thevertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup ofcappuccino isA. 3 coffeesB. 9 coffeesC. 1/3 of a coffeeD. 6 coffees

1. D. has a low opportunity cost for writing a term paperThe ability of a person to create a good or…

Answered: 1. Lamya has a comparative advantage in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A worker in country A can produce either 5 computers or 45 tons of rice, while a worker in country B canproduce either 7 computers or 42 tons of rice. a. Graph the production possibilities curve for each country. On which point of the curve would eachcountry produce if the workers spent half of their time producing each good? b. Which country has absolute advantage? Which country has comparative advantage? In theproduction of rise Country A absolute advantage c. If there was trade, which country would specialize in the production of rice? d. At what price of computers would the countries agree to trade?
6. What is the opportunity cost of a burrito? 7. What is the opportunity cost of a soda?
22. If two persons are trading in two different categories, he would get best output from one and a little less from the other, this process is known as: a. Comparative advantage b. Gains from trade c. Specialization d. Comparative disadvantage
8. A small bakery makes baguettes and muffins. With the resources available (workers, flour, machines) this bakery can produce either 1500 baguettes or 2000 muffins per day. a. What is the opportunity cost of an extra muffin in terms of baguettes? b. Assume that production is currently 1200 muffins and 600 baguettes. If the bakery wanted to expand its muffin production to 1300 muffins per day, how many baguettes would be baked?
7. A common misconception is that trade takes place between two people because: A. they are willing to pay a higher price for a good than it is worth to the current owner. B. they have too much of some goods. C. they have become convinced that it is ethical to do so. D. All the above. E. B and C only.
6. The following is a set of hypothetical produc- tion possibilities for a nation. Combination A B C D Automobiles (thousands) 0 2 6 8 Beef (thousands of tons) 10 974 0 a. Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest? b. Label a point F inside the curve. Why is this an inefficient point? Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points? c. Does this production possibilities curve reflect the law of increasing opportunity costs? Explain. d. What assumptions could be changed to shift the production possibilities curve?
Comparative Advantage 1. How do individuals evaluate opportunity costs to make business decisions? 2.what role does the production-possibility frontier (PPF) has in the decision-making process? 3. Explain how comparative advantage impacts a firm’s decision to engage in trade. 4.Would a business’s decision to trade cause a change to its PPF? Provide specific reasoning to support your claims.
1.Economics is considered practical science because: a.the output level of an economy is mathematically derived. b.the consumers are assumed to make rational decisions. c.the allocation of the scarce resources is done through optimization. d.the marketing strategies are determined by statistical techniques. e.the economic models incorporates every detail of a real-life scenario. 2.The demand for salt in a particular region can significantly increase if: a.the gross income level of the people living in that region increases. b.the price of the salt decreases. c.the price of sugar increases. d.he number of residents increases. e.the cost of producing salt declines. 3.An oil company purchases a fleet of fuel carriers for distribution purpose. This is an example of: a.upstream integration. b.downstream integration. c.conglomerate merger. d.business liquidation. e.horizontal integration.
5. China is able to produce turnips and potatoes in combinations represented by the following table. (Each number represents 1,000s of bushes.) Potatoes Production Turnips point a. B C D E b. C. points. 100 and 0 90 and 10 and 20 and 30 and 40 70 40 0 Plot the data on a production possibilities graph, labeling Can China produce a combination of 30 turnips and 24 potatoes? Draw this production point on the graph (label it F) and verbally explain. Demonstrate that China experiences increasing opportunity costs by calculating the opportunity cost of producing another potato at each production point. Explain.
4. What are two problems and two opportunities that may need to be researched?
1.Which of the following resources is the most rival? A- A music concert at a city park. B-A full moon. C-An interstate highway D-A zoo. E-The labor of a hair stylist 2.Which of the following is considered a basic economic question? A-What are the most advantageous terms of trade? B-When does marginal cost equal marginal benefit? C-Which economy enjoys a lower opportunity cost for this good? D-What is essential knowledge to pass on to the next generation? E-What goods and services should be produced?
4. Steve can bake either 4 loaves of bread or 12 dozen cookies a day. Sarah can bake either 4 loaves of bread or 8 dozen cookies a day. a. Show the production possibilities frontiers for Steve and Sarah b. Suppose trade is not allowed between Steve and Sarah and as a result, both Steve and Sarah spent half a day (12 hours) baking bread and the other half a day baking cookie. Show both the production and consumption bundles for Steve and Sarah on their respective PPFs, when trade is not allowed between Steve and Sarah. c. Show, using production possibility frontiers in (a), that Steve and Sarah would be better off specializing in their baking activities and then trading, rather than baking only for themselves. Be specific and state the production and consumption bundles with trade.

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