1.7 Comparative and Absolute Advantage

Question 1

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?

Revolt · Accepted Answer

Turkish Coffee Company

Question 2

Which best describes how consumers may benefit from specialization?

Revolt · Accepted Answer

Consumers find products at lower prices.

Question 3

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.

Revolt · Accepted Answer

2, 1, 3, 4

Question 4

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

Revolt · Accepted Answer

Prices decrease as a result of increased production efficiencies.

Question 5

[BLANK]

Revolt · Accepted Answer

efficiency

1.7 Comparative and Absolute Advantage Answers

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