Chapter 3 The Global Economy - Assessment 3.1, Assessment 3.2, Assessment 3.3

https://imgur.com/a/cbUK85r Fill in the Blanks For Frankie, the opportunity cost of 1 unit of milk is __(1)__ units of eggs. For Johnny, the opportunity cost of 1 unit of milk is __(2)__ units of eggs. Without specialization, the total output of eggs is __(3)__ units, and the total output of milk is __(4)__ units, for a combined total of __(5)__ units of output. If Frankie and Johnny completely specialize according to comparative advantage, Frankie produces only __(6)__ and Johnny produces only __(7)__. After specialization, combined total output is __(8)__ units. Specializing according to comparative advantage leads to a gain of __(9)__ units of __(10)__.

1) 1.0 2) 2.0 3) 30.0 4) 30.0 5) 60.0 6) milk 7) eggs 8) 70.0 9) 10.0 10) milk

https://imgur.com/a/8RjgA9S Fill in the Blanks With no trade, Country A produces and consumes 10 cars and 20 boats, while Country B produces and consumes 20 cars and 40 boats. Assume both countries specialize according to comparative advantage and trade with one another. If Country A exports 20 cars and imports 30 boats, consumption in Country A increases by __(1)__ boats as a result of trade. If Country B exports 30 boats and imports 20 cars, consumption in Country B increases by __(2)__ boats as a result of trade.

1) 10.0 2) 10.0

Fill in the Blanks Farmer __(1)__ has a comparative advantage in the production of wheat, while Farmer __(2)__ has a comparative advantage in the production of corn, based on the hours each needs to produce one unit of output.

1) Jones 2) Smith

https://imgur.com/a/7o2WpbB Fill in the Blanks Based on comparative advantage, Country A should specialize in the production of __(1)__ and Country B should specialize in the production of __(2)__. If each country specializes according to comparative advantage, their combined output will be __(3)__ cars and __(4)__ boats.

1) cars 2) boats 3) 30.0 4) 80.0

https://imgur.com/a/t3vrqk9 If Andy and Debbie each specialize according to comparative advantage, their combined output will be _____ units of clothing and _____ units of food. - 10; 10 - 20; 10 - 20; 30 - 10; 30

10; 30

https://imgur.com/a/KuhNYLT The opportunity cost of producing one computer is ________ for Germany and ________ for Italy. - 1/2 motorcycle; 1/4 motorcycle - 4 motorcycles; 4 motorcycles - 4 motorcycles; 2 motorcycles - 2 motorcycles; 4 motorcycles

2 motorcycles; 4 motorcycles

https://imgur.com/a/yE0ybZR The opportunity cost of 1 unit of clothing is: - 1 unit of food for Andy and 3/2 units of food for Debbie. - 3/2 units of food for Andy and 1 unit of food for Debbie. - the same for both Andy and Debbie. - impossible to determine from the information provided.

3/2 units of food for Andy and 1 unit of food for Debbie.

If Austin can produce potato chips at a lower opportunity cost than William, then: - William has a comparative advantage in the production of potato chips. - Austin has a comparative advantage in the production of potato chips. - William has an absolute advantage in the production of potato chips. - Austin has an absolute advantage in the production of potato chips.

Austin has a comparative advantage in the production of potato chips.

If Katherine can produce more baskets per hour than Laurie, then: - Laurie has a comparative advantage in the production of baskets. - Katherine has a comparative advantage in the production of baskets. - Laurie has an absolute advantage in the production of baskets. - Katherine has an absolute advantage in the production of baskets.

Katherine has an absolute advantage in the production of baskets.

An import is: - a good or service produced in the domestic country, but sold in a foreign country. - a good or service produced in a foreign country, but sold in the domestic country. - a good that is produced in the domestic country and sold in a foreign country; services are not counted as imports. - a good that is produced in a foreign country and sold in the domestic country; services are not counted as imports.

a good or service produced in a foreign country, but sold in the domestic country.

An export is: - a good or service produced in the domestic country, but sold in a foreign country. - a good or service produced in a foreign country, but sold in the domestic country. - a good that is produced in the domestic country and sold in a foreign country; services are not counted as exports. - a good that is produced in a foreign country and sold in the domestic country; services are not counted as exports.

a good or service produced in the domestic country, but sold in a foreign country.

A quota is: - a tax levied on an import. - the number of units of one good traded for one unit of another good. - a legal limit on the quantity of a product that can be imported from other countries. - an agreement regarding the terms of trade between two countries.

a legal limit on the quantity of a product that can be imported from other countries.

A good or service produced in the domestic country, but sold in a foreign country is ______; a good or service produce in a foreign country but sold in the domestic country is ______. - an import; an export - an export; an import - an absolute output; a comparative output - a comparative output; an absolute output

an export; an import

https://imgur.com/a/OmS8Fau Andy has an absolute advantage in ________ and a comparative advantage in _______. - neither good; food - both goods; food - neither good; clothing - both goods; clothing

both goods; food

https://imgur.com/a/bAGMXeX According to the principle of comparative advantage, both Germany and Italy can gain from specialization and trade if Germany specializes in the production of ________ and Italy specializes in the production of ________. - both goods; neither good - motorcycles; computers - neither good; both goods - computers; motorcycles

computers; motorcycles

Goods and services produced in Mexico and consumed in the U.S. are ________ for the Mexico and ________ for the U.S. - exports; imports - exports; exports - imports; exports - imports; imports

exports; imports

Suppose the U.S. has an absolute advantage in the production of computer components but it does not have a comparative advantage in the production of computer components. According to the principle of comparative advantage, the U.S. should: - import computer components from other countries. - export computer components to other countries. - subsidize the computer component industry. - levy import tariffs on computer components.

import computer components from other countries.

According to the economic principle of comparative advantage, a country should specialize in the production of goods: - it can produce at a lower opportunity cost than its trading partners, ceteris paribus. - it can produce in greater quantities than its trading partners, ceteris paribus. - with very low or zero opportunity cost. - with a high domestic value and a low foreign value.

it can produce at a lower opportunity cost than its trading partners, ceteris paribus.

A country has an absolute advantage in the production of a specific product if it is able to: - produce a smaller quantity of that product in a given amount of time, compared to another country. - produce a larger quantity of that product in a given amount of time, compared to another country. - produce that product at a higher opportunity cost, compared to another country. - produce that product at a lower opportunity cost, compared to another country.

produce a larger quantity of that product in a given amount of time, compared to another country.

A country has a comparative advantage in the production of a specific product if it is able to: - produce a smaller quantity of that product in a given amount of time, compared to another country. - produce a larger quantity of that product in a given amount of time, compared to another country. - produce that product at a higher opportunity cost, compared to another country. - produce that product at a lower opportunity cost, compared to another country.

produce that product at a lower opportunity cost, compared to another country.

A tax levied on an import is called a: - subsidy. - trade treaty. - tariff. - quota.

tariff.

A country has a trade surplus when: - the quantity of exported goods exceeds the quantity of imported goods. - the quantity of imported goods exceeds the quantity of exported goods. - the dollar value of exported goods and services exceeds the dollar value of imported goods and services. - the dollar value of imported goods and services exceeds the dollar value of exported goods and services.

the dollar value of exported goods and services exceeds the dollar value of imported goods and services.

A country has a trade deficit when: - the quantity of exported goods exceeds the quantity of imported goods. - the quantity of imported goods exceeds the quantity of exported goods. - the dollar value of exported goods and services exceeds the dollar value of imported goods and services. - the dollar value of imported goods and services exceeds the dollar value of exported goods and services.

the dollar value of imported goods and services exceeds the dollar value of exported goods and services.

When the dollar value of imported goods and services exceeds the dollar value of exported goods and services, a country has a(n): - comparative advantage. - absolute advantage. - trade surplus. - trade deficit.

trade deficit.