Comparative and Absolute Advantage

Question 1

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 2

[BLANK]

Revolt · Accepted Answer

Specialization

Question 3

Which best describes how producers benefit from specialization?

Revolt · Accepted Answer

Producers can increase their profits.

Question 4

Which calculation helps determine which producer has the absolute advantage?

Revolt · Accepted Answer

Amount produced divided by resources used

Question 5

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

Revolt · Accepted Answer

high efficiency

Question 6

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

Revolt · Accepted Answer

limiting the types of goods and services produced

Question 7

best

Revolt · Accepted Answer

to gain a comparative advantage; to increase efficiency

Question 8

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

Revolt · Accepted Answer

False

Question 9

Which of these best describes an opportunity cost?

Revolt · Accepted Answer

a trade-off

Question 10

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?

Revolt · Accepted Answer

Uncle John’s

Comparative and Absolute Advantage Answers

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