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Question : 11) A person has a comparative advantage in an activity



11) A person has a comparative advantage in an activity whenever she

A) has an absolute advantage in the activity.

B) can perform the activity at a lower opportunity cost than another person can.

C) can do the activity in less time than anyone else.

D) can do everything better than anyone else.


12) Comparative advantage is always a(n) ________ concept.

A) absolute

B) efficiency

C) relative

D) monetary

13) Other things being equal, you can make $20,000 a year teaching, $25,000 a year typing, $30,000 a year driving a cab, and $40,000 a year as a chef. You have a comparative advantage in

A) teaching.

B) driving a cab.

C) being a chef.

D) one of them but we need more information to know which.


14) Comparative advantage implies choosing the activity that

A) has a high opportunity cost.

B) is inside the production possibilities frontier.

C) has the lowest opportunity cost.

D) does not demand any specialization.


15) If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry, then

A) individual X must use fewer hours to paint a fence than individual Y.

B) individual Y will specialize in painting.

C) there is a lower opportunity cost (expressed in units of carpentry) for individual X to paint than for individual Y to paint.

D) specialization will not occur, since each does not have a clear absolute advantage.


16) The ability to produce a good at a lower opportunity cost than others is known as

A) comparative advantage.

B) absolute advantage.

C) specialization.

D) marginal cost production.

17) The division of labor refers to

A) workers being assigned specific tasks.

B) workers performing multiple tasks.

C) separating men and women in the workforce.

D) creating jobs that all people can perform at the same level.


18) Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?

A) Tiger Woods has an absolute advantage in changing oil.

B) Tiger Woods has a comparative advantage in changing oil.

C) There is no opportunity cost for the garage mechanic to change oil.

D) The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic.


19) Division of labor refers to

A) dividing tasks up into several subtasks and having one person perform these subtasks in a certain order.

B) the separation of hourly workers from salaried workers.

C) assigning different workers to different tasks.

D) separating union workers from nonunion workers.


20) Division of labor increases the output of society by

A) eliminating scarcity.

B) reducing the choices people have to make to a more manageable number.

C) ensuring that people are happier in performing their work.

D) allowing resources to specialize in the tasks for which they have a comparative advantage.


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