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Comparative and Absolute Advantage Answers

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1
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True or False? Higher opportunity costs equal a greater comparative advantage.

A
True
B
False
2
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Which calculation helps determine which producer has the absolute advantage?

A
Resources used multiplied by amount produced
B
Amount produced divided by resources used
C
Amount produced minus resources used
D
Resources used divided by amount produced
3

higherlowermultiple

A
higher
B
lower
C
multiple
4

Carmen wants to open her own coffee shop. She has narrowed down a list of wholesale retailers and their cost per pound of coffee beans. Whole Sale Company Cost per lb.Café con Leche$8.50Beans Brothers$7.50Colombian Co.$11.25Turkish Coffee Company$6.25Which company has the comparative advantage in cost per pound of coffee?

A
Café con Leche
B
Beans Brothers
C
Colombian Co.
D
Turkish Coffee Company
5

This table shows the cost of producing ice cream for several manufacturers.Manufacturer Amount Produced CostThe Dairy 100 gallons $10 Ice Cream, Inc. 100 gallons $15 Frozen Treats 150 gallons $12 Bob & Gary’s 125 gallons $15 Which manufacturer has the absolute advantage?

A
The Dairy
B
Ice Cream, Inc.
C
Frozen Treats
D
Bob & Gary’s
6

Which describes a way in which consumers most likely benefit from producers’ absolute advantage?

A
Consumers’ opportunity costs decrease.
B
Prices decrease as a result of increased production efficiencies.
C
Producers always use savings to improve products.
D
Consumers can find a given product in more places.
7

Which scenario is the best example of an opportunity cost?

A
A computer company issues a recall on its tablets.
B
A computer company produces fewer laptops to meet tablet demand.
C
A computer company reduces the price on last year’s models.
D
A computer company stops making computers with CD/DVD drives.
8

[BLANK]

A
Production possibility
B
Absolute advantage
C
Competition
D
Specialization
9

Which best describes how consumers may benefit from specialization?

A
Consumers can only purchase high-quality goods.
B
Consumers have more price options.
C
Consumers receive more sale offers.
D
Consumers find products at lower prices.
10

This table shows the production possibility schedule for several toothpaste companies. Toothpaste company Large tubes Small tubes 1 Sparkling 100 per hour 200 per hour 2 Bright White 100 per hour 250 per hour 3 Fresh! 200 per hour 250 per hour 4 Mmmint 150 per hour 150 per hour Use the numbers to place the companies in order of greatest comparative advantage to least comparative advantage in producing small tubes of toothpaste.

A
2, 1, 3, 4
B
1, 2, 3, 4
C
4, 3, 1, 2
D
2, 1, 4, 3
11

True or False? Higher opportunity costs equal a greater comparative advantage.

A
True
B
False
12

This table shows the cost of producing ice cream for several manufacturers.Manufacturer Amount Produced CostThe Dairy 100 gallons $10 Ice Cream, Inc. 100 gallons $15 Frozen Treats 150 gallons $12 Bob & Gary’s 125 gallons $15 Which manufacturer has the absolute advantage?

A
The Dairy
B
Ice Cream, Inc.
C
Frozen Treats
D
Bob & Gary’s
13

Which is the best measurement to use to determine who might have the absolute advantage?

A
high opportunity cost
B
low opportunity cost
C
low efficiency
D
high efficiency
14

Which best describes how producers benefit from specialization?

A
Producers can increase their profits.
B
Producers can expand their market.
C
Producers can offer a wider range of goods.
D
Producers can increase sales.
15

Which of these best describes an opportunity cost?

A
a win-win
B
a loss
C
a chance
D
a trade-off
16

A producer with a comparative advantage has the ability to produce a good or service at

A
a lower opportunity cost than any competitor can.
B
a faster rate than any competitor can.
C
a greater volume than any competitor can.
D
a lower cost than any competitor can.
17

This table shows the number of cookies several bakeries sell each day.Bakery Number of Cookies Sold Mrs. Track’s 90 Chips 100 The Bakeshop 75 Uncle John’s 125 All else being equal, which bakery has the absolute advantage?

A
Mrs. Track’s
B
Chips
C
The Bakeshop
D
Uncle John’s
18

What can a producer gain by specializing?

A
sales
B
new customers
C
absolute advantage
D
opportunity costs
19

Which best explains why producers choose to specialize? Choose two answers.to increase competitionto gain a comparative advantageto decrease the amount of goods producedto maintain market shareto increase efficiency

A
to increase competition
B
to gain a comparative advantage
C
to decrease the amount of goods produced
D
to maintain market share
E
to increase efficiency
20

When discussing comparative and absolute advantage, which best describes specialization?

A
developing expertise in certain types of production
B
limiting the types of goods and services produced
C
targeting specific consumers and retailers
D
producing certain items for specific market segments

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