Question

True or False?

6) The price of apples in a given week is an example of an economic variable.

7) In Country A a worker can produce either 6 bushels of corn or 18 pounds of tomatoes in one day. In Country B a worker can produce either 4 bushels of corn or 16 pounds of tomatoes in one day. Country A has an absolute advantage in corn production.

8) In Country A a worker can produce either 6 bushels of corn or 18 pounds of tomatoes in one day. In Country B a worker can produce either 4 bushels of corn or 16 pounds of tomatoes in one day. Country B has a comparative advantage in corn production.

9) A production possibilities frontier identifies the relationship between the quantity of a good produced and the cost of producing that good.

10) In the circular flow model, people earn income and spend it on goods and services. The amount spent on the goods and services becomes profit for the firm.

Answer 1

7) True because country A can produce more bushela of corn with samw worker.

8) Opportunity cost of 1bushels of corn in country A=3pounds of tomatoes

Opp. Cost of 1 bushels of corn in country B=4pounds.

Thus country A has CA in corn production.

9) False because PPF can be used to find opportunity cost.

10) False because amount spent on goods is not profit because firms has to pay their factor of production prices.

Ans is False

5)True because country A can produce more bushela of corn with samw worker.