Liberty ECON 213 Problem Set Ch. 2 Answers Complete Solutions
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Based on the table above, which of the following statements is true?
Choose one: A. Matthew has a comparative advantage in producing jars of baby food, while Mary Ann has a comparative advantage in producing bottles of coconut water B. Both Mary Ann and Matthew have a comparative advantage in producing jars of baby food or bottles of coconut water. C. Matthew has a comparative advantage in producing bottles of coconut water, while Mary Ann has a comparative advantage in producing jars of baby food. D. Neither Mary Ann nor Matthew has an absolute advantage in producing jars of baby food or bottles of coconut water.
Use the following information to answer the questions below. Suppose that Oscar and Felix are roommates and they want to find a way to divide up household chores—cooking meals and doing laundry. It takes Oscar 45 minutes to make a meal and 90 minutes to do a load of laundry. It takes Felix 60 minutes to make a meal and 60 minutes to do a load of laundry.
(a) has the absolute advantage in making meals.
(b) has the absolute advantage in doing laundry.
(a) Oscar’s opportunity cost of doing a load of laundry is meals. (b) Felix’s opportunity cost of doing a load of laundry is dinners.
STATUS
If Oscar and Felix want to specialize, (a) Oscar should
(b) Felix should
If Oscar and Felix trade, one load of laundry should trade for more than (a) meal(s) but fewer than (b) meal(s).
The figure above shows a production possibilities frontier (PPF) for a society that makes two goods—pizza and wings. For each point in the figure, indicate whether the point represents an efficient use of resources, an inefficient use of resources, or is unattainable.
The figure below depicts three production possibility frontiers for an economy that produces two goods, pizza and BMWs. Refer to the figure when you answer the questions.
A movement from point A to point B could occur due to
A movement from point A to point C could occur due to
A movement from point C to point D could occur due to
Suppose that Katniss and Peeta have been exiled on a deserted island. To feed themselves, they need to catch fish and hunt rabbits. The table below shows the production potential of Katniss and Peeta. If Katniss spends all her time fishing, she can catch 40 fish. If she spends all her time hunting rabbits, she can catch 10 rabbits. Peeta can spend all his time on fish and catch 8 fish or all his time on rabbits and catch 12 rabbits. Both Katnis and Peeta face a constant trade-off between catching fish and hunting rabbits. Katniss’s opportunity cost for catching 1 rabbit is fish.
Peeta’s opportunity cost for catching 1 rabbit is fish.
Suppose Katniss and Peeta specialize and trade. For trade to be mutually beneficial, the price of a rabbit should be more than fish but less than fish.
Suppose we have a 2-person world, with only Stephen and his friend LeBron. Suppose that Stephen can move 70 boxes or bake 28 cookies in an hour. Suppose that LeBron could move 24 boxes or bake 6 cookies in an hour. Is trade possible?
