Question 1

Consider two individuals,Phil and Oprah,who produce toy trucks and flowers.Phil and Oprah's hourly productivity are as follows:
  
Who has the absolute advantage and who has the comparative advantage in the production of flowers or trucks?

Accepted Answer

The answer of Consider two individuals,Phil and Oprah,who produce toy...

Question 2

Imagine two countries,Bruceland and Davidia.Bruceland is producing everything at a lower absolute cost than Davidia.What would be the reason for the two countries to trade?

Accepted Answer

The answer of Imagine two countries,Bruceland and Davidia.Bruceland is producing...

Question 3

Suppose that in the time it takes for him to bake a cake,Bob can produce 5 pairs of jeans.In the time it takes for Joe to bake a cake,he can produce 8 pairs of jeans.In this example,who has the absolute advantage in baking a cake?

Accepted Answer

A)  Joe 
B)  both Bob and Joe 
C)  Bob 
D)  There is insufficient information to answer this question.

Question 4

Recall the Application about the market for meteorites to answer the following question(s).
-According to the Application,what determines the price of a meteorite?

Accepted Answer

A)  age 
B)  rarity 
C)  color 
D)  similarity to earth rocks

Question 5

When there is imperfect information,a role of government is to disseminate information and promote informed choice.

Accepted Answer

A) True 
 B)False

Question 6

Recall the Application about productivity in the nation of Latvia in the 1990s to answer the following question(s).
-According to the Application,Latvia has comparative advantage in the production of which good?

Accepted Answer

A)  saw timber 
B)  grain 
C)  milk 
D)  livestock

Question 7

What is an import?

Accepted Answer

The answer of What is an import?...

Question 8

The decrease in the scarcity of a product usually results in

Accepted Answer

A)  an increased number of sizes. 
B)  more colors being available. 
C)  lower prices. 
D)  more stores selling the product.

Question 9

A market failure could be caused by

Accepted Answer

A)  imperfect production. 
B)  many firms competing against each other for customers. 
C)  profit. 
D)  imperfect competition.

Question 10

One of the most obvious clues to the relative scarcity of a product in a market economy is

Accepted Answer

A)  the variations in available sizes. 
B)  its current market price. 
C)  the limited selection of colors. 
D)  none of the above

Question 11

Insurance

Accepted Answer

A)  specifies the term of exchange, facilitating exchange between strangers. 
B)  reduces the risk of entrepreneurs. 
C)  provides the public with reliable information about the performance of a firm. 
D)  increases the risk faced by entrepreneurs.

Question 12

When the government filed a lawsuit against Microsoft in 1998 alleging that Microsoft illegally bundled Internet Explorer in its operating software,the government's objective was to

Accepted Answer

A)  foster competition. 
B)  reduce uncertainty. 
C)  combat pollution. 
D)  reduce imperfect information.

Question 13

If Tom can produce 20 multiple choice questions or 30 true/false questions in an hour,and Mary can produce 15 multiple choice questions or 15 true/false questions in an hour,then Tom has a comparative advantage in writing true/false questions.

Accepted Answer

A) True 
 B)False

Question 14

Consider two individuals,Willy and Blythe,who produce carrots and apples.Willy and Blythe's hourly productivity are as follows:
  
Who has the absolute advantage and who has the comparative advantage in the production of apples and carrots?

Accepted Answer

The answer of Consider two individuals,Willy and Blythe,who produce carrots...

Question 15

In a market system,profits

Accepted Answer

A)  are unfair. 
B)  are too high. 
C)  signal to entrepreneur what to produce. 
D)  all of the above

Question 16

Table 3.2
-Consider two individuals,Rose and Sharon,who produce fish and coconuts.Rose and Sharon's hourly productivity are shown in Table 3.2.Rose's opportunity cost of producing 1 coconut is

Accepted Answer

A)  1/3 of a fish. 
B)  1 1/2 fish. 
C)  3 fish. 
D)  6 fish.

Question 17

The more times a worker performs a particular task,the more proficient the worker becomes at that task.This is called

Accepted Answer

A)  continuity. 
B)  innovation. 
C)  specialization. 
D)  repetition.

Question 18

A product produced in a foreign country and purchased by residents of the home country is ________ for the home country.

Accepted Answer

A)  an export 
B)  an import 
C)  savings 
D)  investment

Question 19

What is an export?

Accepted Answer

The answer of What is an export?...

Question 20

Table 3.3
-Consider two individuals,Bob and Jerry,who produce guitars and banjos.Bob and Jerry's weekly productivity are shown in Table 3.3.Which of the following is true?

Accepted Answer

A)  Bob has a comparative advantage in producing guitars but not banjos. 
B)  Bob has a comparative advantage in producing banjos but not guitars. 
C)  Bob has a comparative advantage in producing both goods. 
D)  Bob does not have a comparative advantage in producing either good.

Exam 3: Exchange and Markets

Consider two individuals,Phil and Oprah,who produce toy trucks and flowers.Phil and Oprah's hourly productivity are as follows: Who has the absolute advantage and who has the comparative advantage in the production of flowers or trucks?