Question 1

According to Adam Smith, why do we expect our dinner from the butcher, the brewer, or the baker?

Accepted Answer

Because of their regard to their own interest.

Question 2

The bowed-out shape of the production possibilities curve (PPC) for Pizza and Robots illustrates which economic principle?

Accepted Answer

Law of Increasing Opportunity Cost

Question 3

Using the table of Bikes and Computers, what is the opportunity cost of moving from point B to point C?

Accepted Answer

$$3$$ Bikes

Question 4

If the opportunity cost of producing more of one good increases as you produce more, which law is being demonstrated?

Accepted Answer

Law of Increasing Opportunity Cost

Question 5

Given the table for the United States and Canada, what is the opportunity cost for the United States when they produce one plane?

Accepted Answer

$$2$$ Cars

Question 6

Which country has a comparative advantage in producing planes, based on the table provided?

Accepted Answer

Canada

Question 7

If the opportunity cost of producing one more unit of a good is always the same, what type of opportunity cost is this?

Accepted Answer

Constant Opportunity Cost

Question 8

Suppose Angus can produce $$30$$ tacos or $$5$$ burritos per hour, and Brian can produce $$16$$ tacos or $$4$$ burritos per hour. Who has the absolute advantage in producing tacos?

Accepted Answer

Angus

Question 9

Given the benefit and cost table, what is the marginal benefit of the third time?

Accepted Answer

$$5$$

Question 10

If the total benefit of an activity is $$50$$ and the total cost is $$36$$, what is the net benefit?

Accepted Answer

$$14$$

Question 11

If Lindsay takes $$2$$ hours to make a ukulele and $$4$$ hours to make a bead necklace, what is her opportunity cost of making one ukulele?

Accepted Answer

$$0.5$$ bead necklaces

Question 12

If the United States and Canada specialize according to comparative advantage and trade, which of the following is true?

Accepted Answer

Both countries can consume beyond their individual production possibilities frontiers.

Question 13

If the marginal cost of an activity exceeds the marginal benefit, what should a rational decision-maker do?

Accepted Answer

Reduce the activity

Question 14

Which of the following best describes absolute advantage?

Accepted Answer

The ability to produce more of a good with the same resources

Question 15

If the PPC is a straight line, what does this indicate about opportunity costs?

Accepted Answer

Opportunity costs are constant

Question 16

If Brian's opportunity cost of producing one taco is $$0.25$$ burritos, what is his opportunity cost of producing one burrito?

Accepted Answer

$$4$$ tacos

Question 17

If the opportunity cost of moving from point E to point D on the PPC is $$5$$ bikes, what does this mean?

Accepted Answer

Producing $$2$$ more computers requires giving up $$5$$ bikes

Question 18

Which of the following is NOT a result of specialization and trade based on comparative advantage?

Accepted Answer

Each country produces both goods equally

Question 19

If the marginal benefit of the second time is $$15$$ and the marginal cost is $$12$$, should the activity be undertaken a second time?

Accepted Answer

Yes, because $$15 \u003e 12$$

Question 20

If Angus's opportunity cost of producing one burrito is $$6$$ tacos, what is his opportunity cost of producing one taco?

Accepted Answer

$$\frac{1}{6}$$ burritos

Resource Allocation, Opportunity Cost, and Comparative Advantage: Core Concepts in Microeconomics

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