E: Chapter 3 practice quiz

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then

Caroline has comparative average for socks and Dave has comparative average for sweaters.

In an hour, Mateo can wash 2 cars or mow 1 lawn, and Sophia can wash 3 cars or mow 1 lawn. When Mateo and Sophia produce and make a mutually beneficial trade on comparative advantage,

Mateo mows more and Sophia washes more.

In an hour, Mateo can wash 2 cars or mow 1 lawn, and Sophia can wash 3 cars or mow 1 lawn. Between Mateo and Sophia, who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?

Sophia in washing, Mateo in mowing.

In an hour, Mateo can wash 2 cars or mow 1 lawn, and Sophia can wash 3 cars or mow 1 lawn. Who has the absolute advantage in car washing, and who has the absolute advantage in lawn mowing?

Sophia in washing, neither in mowing.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of 1 unit of food in Korea is a. 1/2 of a unit of electronics. b. 1/4 of a unit of electronics. c. 4 units of electronics. d. 2 units of electronics.

a. 1/2 of a unit of electronics.

Which of the following statements is true? a. A self-sufficient country at best can consume on its production possibilities frontier. b. Only countries with an absolute advantage in the production of every good should strive to be self-sufficient. c. Self-sufficiency is the road to prosperity for most countries. d. A self-sufficient country consumes outside its production possibilities frontier.

a. A self-sufficient country at best can consume on its production possibilities frontier.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Food Electronics Australia 20 5 Korea 8 4 Which of the following statements about comparative advantage is true? a. Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics. b. Korea has a comparative advantage in the production of food while Australia has a comparative advantage in the production of electronics. c. Australia has a comparative advantage in the production of both food and electronics. d. Korea has a comparative advantage in the production of both food and electronics. e. Neither country has a comparative advantage.

a. Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics.

Before Frank and Ruby engage in trade, each of them a. consumes at a point on his or her production possibilities frontier. b. consumes the same amounts of meat and potatoes as the other. c. consumes at a point outside his or her production possibilities frontier. d. consumes at a point inside his or her production possibilities frontier.

a. consumes at a point on his or her production possibilities frontier.

For a self-sufficient producer, the production possibilities frontier a. is the same as the consumption possibilities frontier. b. is always a straight line. c. is greater than the consumption possibilities frontier. d. is less than the consumption possibilities frontier.

a. is the same as the consumption possibilities frontier.

If a nation has a comparative advantage in the production of a good, a. it can produce that good at a lower opportunity cost than its trading partner. b. it can produce that good using fewer resources.

a. it can produce that good at a lower opportunity cost than its trading partner.

A nation will typically import those goods in which a. other nations have a comparative advantage. b. the nation has a comparative advantage. c. other nations have an absolute advantage. d. the nation has an absolute advantage.

a. other nations have a comparative advantage.

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade, a. the domestic price of 1 ring is 1/3 of a watch. b. the domestic price of 1 ring is 1/4 of a watch. c. the domestic price of 1 ring is 12 watches. d. the domestic price of 1 ring is 3 watches. e. the domestic price of 1 ring is 4 watches.

a. the domestic price of 1 ring is 1/3 of a watch.

Suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor, while producing a shirt takes 4 hours of labor. What will these nations trade? a. China will export aircraft, and the United States will export shirts. b. China will export shirts, and the United States will export aircrafts. c. Both nations will export shirts. d. There are no gains from trade in this situation.

b. China will export shirts, and the United States will export aircrafts.

Suppose the world consists of two countries—the United States and Mexico. Furthermore, suppose there are only two goods—food and clothing. Which of the following statements is true? a. If the United States has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of clothing. b. If the United States has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing. c. If the United States has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing. d. If the United States has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of food. e. None of the above is true.

b. If the United States has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.

After Frank and Ruby engage in trade, each of them a. consumes at a point on his or her production possibilities frontier. b. consumes at a point outside his or her production possibilities frontier. c. consumes the same amounts of meat and potatoes as the other. d. consumes at a point inside his or her production possibilities frontier.

b. consumes at a point outside his or her production possibilities frontier.

According to the principle of comparative advantage, a. countries should specialize in the production of goods for which they use fewer resources in production than their trading partners. b. countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partner. c. countries should specialize in the production of goods that they enjoy consuming. d. countries with a comparative advantage in the production of every good need not specialize.

b. countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partner.

If a nation has an absolute advantage in the production of a good, a. it can produce that good at a lower opportunity cost than its trading partner. b. it can produce that good using fewer resources than its trading partner. c. it can benefit by restricting imports of that good. d. it will specialize in the production of that good and export it. e. none of the above is true.

b. it can produce that good using fewer resources than its trading partner.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Food Electronics Australia 20 5 Korea 8 4 Korea should a. produce neither good because it has an absolute disadvantage in the production of both goods. b. specialize in electronics production, export electronics, and import food. c. specialize in food production, export food, and import electronics. d. produce both goods because neither country has a comparative advantage.

b. specialize in electronics production, export electronics, and import food.

The production possibilities frontier illustrates a. the combinations of output that an economy wants to produce. b. the combinations of output that an economy can produce. c. the combinations of output that an economy should consume. d. the combinations of output that an economy should produce.

b. the combinations of output that an economy can produce.

Which of the following statements is not correct? a. Trade allows the nation to consume outside of their production curves. b. Trade has the potential to benefit all nations. c. Absolute average is the driving force of specialization. d. Trade allows for specialization.

c. Absolute average is the driving force of specialization.

Joe is a tax accountant. He receives $100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true? a. Joe should not hire an assistant because the assistant cannot type as fast as he can. b. Joe should hire the assistant as long as he pays the assistant less than $100 per hour. c. Joe should hire the assistant as long as he pays the assistant less than $25 per hour. d. None of the above is true.

c. Joe should hire the assistant as long as he pays the assistant less than $25 per hour.

Kayla can cook dinner in 30 minutes and wash the laundry in 20 minutes. Her roommate takes half as long to do each task. How should the roommates allocate the work? a. Kayla should do more of the cooking based on her comparative advantage. b. Kayla should do more of the washing based on her comparative advantage. c. There are no gains from trade in this situation. d. Kayla should do more of the washing based on her absolute advantage.

c. There are no gains from trade in this situation.

Which of the following statements about trade is true? a. People that are skilled at all activities cannot benefit from trade. b. Trade can benefit everyone in a society because it allows people to specialize in activities in which they have an absolute advantage. c. Trade can benefit everyone in a society because it allows people to specialize in activities in which they have an comparative advantage. d. Unrestricted international trade benefits every person in a country equally.

c. Trade can benefit everyone in a society because it allows people to specialize in activities in which they have an comparative advantage.

The most obvious benefit of specialization and trade is that they allow us to a. consume more goods by forcing people in other countries to consume fewer goods. b. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. c. consume more goods than we otherwise would be able to consume. d. work more hours per week than we otherwise would be able to work.

c. consume more goods than we otherwise would be able to consume.

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade, a. the opportunity cost of 1 watch is 4 rings. b. the opportunity cost of 1 watch is 12 rings. c. the opportunity cost of 1 watch is 3 rings. d. the opportunity cost of 1 watch is 1/4 of a ring. e. the opportunity cost of 1 watch is 1/3 of a ring.

c. the opportunity cost of 1 watch is 3 rings.

When a country has a comparative advantage in producing a certain good, a. the country should import that good. b. the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good. c. then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production. d. the country should produce just enough of that good for its own consumption.

c. then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of electronics in Australia is a. 1/5 of a unit of food. b. 1/4 of a unit of food. c. 5 units of food. d. 4 units of food.

d. 4 units of food.

Comparative advantage is related most closely with...

opportunity cost

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

they choose not to trade with one another.

Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Labor Hours Needed for 1 lb pounds produced in 24 hours Pork Tomatoes Pork Tomatoes Farmer 6 3 4 8 Rancher 4 4 6 6 What does the farmer have the comparative average in producing?

tomatoes