Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
8th Edition
ISBN: 9780134641843
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 3, Problem 2MCQ
To determine
(a)
Best Statement
To determine
(b)
Best Statement
To determine
(c)
Best Statement
To determine
(d)
Best Statement.
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3. Opportunity Cost
Poornima and Valerie are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Poornima takes 5 hours to brew a gallon of root beer and 3 hours to make a pizza. Valerie takes 8 hours to brew a gallon of root beer and 4 hours to make a pizza.
Poornima's opportunity cost of brewing a gallon of root beer is__________ , and Valerie's opportunity cost of brewing a gallon of root beer is_________ .
________ has an absolute advantage in brewing root beer and__________ has a comparative advantage in brewing root beer.
If Poornima and Valerie trade foods with each other,________ will trade away pizza in exchange for root beer.
The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is___________ of root beer, and the lowest price…
3. Opportunity Cost
Poornima and Valerie are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Poornima takes 5 hours to brew a gallon of root beer and 3 hours to make a pizza. Valerie takes 8 hours to brew a gallon of root beer and 4 hours to make a pizza.
Poornima's opportunity cost of making a pizza is of root beer, and Valerie's opportunity cost of making a pizza is of root beer.
has an absolute advantage in making pizza, and has a comparative advantage in making pizza.
If Poornima and Valerie trade foods with each other, will trade away pizza in exchange for root beer.
The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.
Debra can make either 12 cakes or 16 cookies in 4 hours. Sam can make either 6 cakes or 12 cookies in 4 hours.
State Debra’s and Sam’s opportunity costs of producing one cake and one cookie. Draw and place your answer in a table which looks something like this: Cake CookieDebraSam
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Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
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- QUESTION 14 Assume the economy of Scoob can produce 5 tons of rice and 15 tons of wheat while the economy of Widgland can produce 10 tons of rice and 20 tons of wheat. Which of the following is FALSE? A. Opportunity cost of 1 ton of wheat in Widgland is 0.5 B. Opportunity cost of 1 ton of rice in Widgland is 0.5 C. Opportunity cost of 1 ton of wheat in Scoob is 0.33 D. Opportunity cost of 1 ton of rice is Scoob is 3arrow_forwardDirection: Plot the Production Possibilities Frontier of the below-data with good X on the horizontal axis and good Y on the vertical axis. GOOD PRODUCTION ALTERNATIVES A B C D E X 0 15 18 21 24 Y 45 42 37 27 0 Question: Explain the different points on the curve. What does each point represent? Why is it important for an economy to be on its production possibilities frontier?arrow_forwardSuppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables. The combination of ________ reflects ________. Question content area bottom Part 1 A. 1000 books and 1500 tables; a free lunch B. 1000 books and 500 tables; an efficient point C. 1000 books and 1000 tables; a free lunch D. 500 books and 1000 tables; an inefficient but attainable pointarrow_forward
- Table 1: James Lucy Wagons 16 18 Tricycles 32 24 Table 1 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. What is Lucy's opportunity cost of making a wagon?arrow_forwardThe table shows the production possibilities of a small Pacific island economy. Possibility Fish Berries (pounds) (pounds) A 0 and 20 B 1 and 18 C 2 and 15 D 3 and 11 E 4 and 6 F 5 and 0 If the islanders change production from possibility C to possibility D , they ________. A. get a free lunch of 1 pound of fish and don't incur an opportunity cost B. face a tradeoff and incur an opportunity cost of 1 pound of fish C. gain 4 pounds of berries and give up 1 pound of fish D. face a tradeoff and incur an opportunity cost of 4 pounds of berries screenshot attachedarrow_forwardSuppose that Canada produces only lumber and fish. It has 18 million workers, each of whom can cut 10 feet of lumber or catch 20 fish daily. What is the maximum amount of lumber Canada could produce daily? What is the maximum amount of fish Canada could produce daily? Draw Canada’s production possibilities frontier.arrow_forward
- 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.arrow_forwardImagine a society that produces military goods and consumer goods, which we’ll call “guns” and “butter.” Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want A smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger “peace dividend,” measured by the increase in butter production? Explain.arrow_forwardImagine a society that produces Capital goods and consumer goods. Draw a production possibilities frontier for capital and consumer goods. Explain why it most likely has a bowed-out shape. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. Imagine that the society has two political parties, party A (who wants capital goods) and the party B (who want a consumer goods). Show a point on your production possibilities frontier that the part A might choose and a point the party B might choose. Imagine that our progressive neighboring country reduces the size of its consumer goods. As a result, both the Party A and B reduce their desired production of consumer goods by the same amount. Which party would get the bigger “technology dividend,” measured by the increase in capital production? Explain.arrow_forward
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