Chapter 2 Trade-offs, Comparative Advantage, and the Market System

7) Refer to Table 2-3.Which of the following statements istrue?

A) Jack has a comparative advantage in both tasks.

B) George has a comparative advantage in both tasks.

C) Jack has a comparative advantage in lawn mowing and George in garden cultivating.

D) Jack has a comparative advantage in garden cultivating and George in lawn mowing.

8) Comparative advantage means

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

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

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

D) compared to others you are better at producing a product.

9) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

A) never have to engage in trade with other nations

B) increase the variety of products that it can produce with a decrease in resources

C) consume a combination of goods that lies outside its own production possibilities frontier

D) produce a combination of goods that lies outside its own production possibilities frontier

10) For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

A) Switzerland has the comparative advantage in chocolate.

B) Switzerland has the comparative advantage in watches.

C) Germany has the comparative advantage in watches and chocolate.

D) Germany has the comparative advantage in watches.