Chapter 2 Scarcity and the World of Trade-Offs

Question

36) If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

A) Irene has the absolute advantage in the production of tables.

B) Greg has the absolute advantage in the production of chairs.

C) Irene has the comparative advantage in the production of chairs.

D) Greg has the comparative advantage in the production of chairs.


37) If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

A) Irene has the absolute advantage in the production of chairs.

B) Irene has the comparative advantage in the production of tables.

C) Greg has the absolute advantage in the production of chairs.

D) Greg has the comparative advantage in the production of chairs.

38) When Adam Smith's ten pin workers specialized, they were able to increase output of pins in a day from 200 to 48,000. One reason for the increase in pin output was due to

A) the time saved when workers do not need to shift from one task to another.

B) the boredom the workers suffered when they stopped making a whole pin and only concentrated on one task such as painting the heads white.

C) new machinery.

D) the bonus they received when they produced more pins.

39) The making and selling of a pencil for ten cents would likely NOT be possible, but for

A) relative advantage.

B) the production possibilities curve.

C) absolute advantage.

D) the division of labor.


40) When productive activities are organized according to the principle of the division of labor,

A) scarcity is eliminated.

B) we do not devote enough resources for capital investment.

C) total output increases due to the advantages of specialization.

D) an inefficient outcome results.

41) Division of labor means that

A) the labor market in the United States is geographically segmented.

B) some employees join labor unions and others do not.

C) management and labor are always in conflict.

D) the production process is divided into smaller tasks.

42) Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume

A) the chairs in factory A are of higher quality.

B) the workers in factory B have more job satisfaction.

C) factory B can take advantage of division of labor and produce more efficiently.

D) factory A can take advantage of division of labor and produce more efficiently


43) If a CEO can type faster than her secretary, then

A) the CEO has a comparative advantage in typing.

B) the CEO has neither a comparative advantage in typing, nor in management.

C) the CEO should still continue performing CEO duties since the CEO has a comparative advantage in management, and the secretary should continue typing.

D) the CEO should still continue performing CEO duties as well as typing since he has a comparative advantage in both management, and typing.

44) "My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has

A) an absolute advantage in cooking, cleaning, and car repair.

B) a comparative advantage in cooking, cleaning, and car repair.

C) more intelligence than me.

D) more income than me.

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