Micro 2-2

Table 2-2

GeorgeJack

Lawns Mowed 10 6

Gardens Cultivated 5 4

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens.

Refer to Table 2-2. What is George's opportunity cost of mowing a lawn?

• wo-thirds of a garden cultivated.

• two lawns mowed

• one and a half lawns mowed

• half a garden cultivated

Table 2-2

George Jack

Lawns Mowed 10 6

Gardens Cultivated 5 4

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens.

Refer to Table 2-2. What is George's opportunity cost of cultivating a garden?

• two lawns mowed

• two-thirds of a garden cultivated

• one and a half lawns mowed

• half a garden cultivated

Comparative advantage means

• the ability to produce more of a product with the same amount of resources than any other producer.

• the ability to produce a good or service at a lower opportunity cost than any other producer.

• compared to others you are better at producing a product.

• the ability to produce a good or service at a higher opportunity cost than any other producer.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

• engage in mutually beneficial trade with other nations.

• consume a combination of goods that lies outside its own production possibilities frontier.

• increase the variety of products that it can consume with no increase in resources.

• produce a combination of goods that lies outside its own production possibilities frontier.

Table 2-3

One Digital CameraWheat (per pound)

China 100 hours 4 hours

South Korea 60 hours 3 hours

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.

Refer to Table 2-3. Does either China or South Korea have an absolute advantage and if so, in what product?

• South Korea has an absolute advantage in both products.

• China has an absolute advantage in wheat.

• South Korea has an absolute advantage in wheat.

• China has an absolute advantage in digital cameras.

Table 2-3

One Digital CameraWheat (per pound)

China 100 hours 4 hours

South Korea 60 hours 3 hours

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.

Refer to Table 2-3. South Korea has a comparative advantage in the production of

• both products.

• wheat.

• neither product.

• digital cameras.

Table 2-3

One Digital CameraWheat (per pound)

China 100 hours 4 hours

South Korea60 hours 3 hours

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.

Refer to Table 2-3. If the two countries specialize and trade, who should export wheat?

• They should both be exporting wheat.

• There is no basis for trade between the two countries.

• South Korea

• China

An example of a factor of production is

• the automobiles exported by an auto manufacturer.

• a loan granted to an auto manufacturer.

• a worker hired by an auto manufacturer.

• a car produced by an auto manufacturer.

A worker is hired in a

• government market.

  
  

• goods and services market.

• product market.

• factor market

The resource income earned by those who supply labor services is called

• wages and salaries.

• stock options.

• bonus.

• profit.