ECON CH 20

Zena can produce either 18 hats or 9 shirts an hour, while Danu can produce either 16 hats or 4 shirts an hour. The opportunity cost of producing 1 hat for Zena and Danu, respectively, are: a/0.5 shirts; 0.25 shirts. b/0.25 shirts; 0.5 shirts. c/16 shirts; 4 shirts. d/18 shirts; 9 shirts

a/0.5 shirts; 0.25 shirts.

Production Possibilities from One Day's Labor Input: USA: 12 tons of corn or 3 tons of tomatoes. India: 3 tons of corn or 12 tons of tomatoes. The opportunity cost of one ton of corn in India is: a/4 tons of tomatoes. b/4 tons of corn. c/3 tons of corn. d/1 ton of Ragu tomato sauce.

a/4 tons of tomatoes

In Cambodia one person can produce 330 tons of barley or 110 hats in one year. In Panama one person can produce 400 tons of barley or 200 hats in one year. Which of the following is true? a/Cambodia has a comparative advantage in the production of barley. b/Panama has both an absolute and comparative advantage in the production of barley. c/Cambodia has an absolute advantage in the production of barley. d/Panama has a comparative advantage in the production of barley.

a/Cambodia has a comparative advantage in the production of barley.

If Canada has a comparative disadvantage in the production of toilet paper: a/Canada can still gain from international trade in toilet paper, by trading for it at a lower opportunity cost than producing it domestically. b/Canada cannot gain from international trade unless it has an absolute advantage in every other commodity. c/Canada cannot gain from international trade for toilet paper. d/Canada can still gain from international trade in toilet paper only if it has an absolute advantage in that commodity.

a/Canada can still gain from international trade in toilet paper, by trading for it at a lower opportunity cost than producing it domestically.

The concept of comparative advantage explains how one country: a/may be able to produce something at a lower opportunity cost than another country. b/may be able to produce something at a lower dollar cost than another country. c/with an absolute advantage in producing two different may export goods both of those goods to the other country. d/may be able to produce everything relatively more efficiently than another country.

a/may be able to produce something at a lower opportunity cost than another country.

Of the following which best explains how the slope of the production possibility frontier is determined while expanding production of one good, compared to the measured loss of another good?. a/opportunity cost b/specialization c/absolute advantage d/relative advantage

a/opportunity cost

Some countries that try producing all of their own goods and services face the problem that: a/some industries are too small to be efficient if restricted to their domestic markets alone. b/the opportunity cost of producing some of their own goods is lower than that of trading with others for them. c/they will not be able to satisfy the wants of all of their citizens. d/they can deplete their natural resources as a result.

a/some industries are too small to be efficient if restricted to their domestic markets alone.

Some countries that try producing all of their own goods and services face the problem that: a/some industries are too small to be efficient if restricted to their domestic markets alone. b/they will not be able to satisfy the wants of all of their citizens. c/they can deplete their natural resources as a result. d/the opportunity cost of producing some of their own goods is lower than that of trading with others for them.

a/some industries are too small to be efficient if restricted to their domestic markets alone.

Orlando can produce either 18 bracelets or 9 necklaces an hour, while Daytona can produce either 16 bracelets or 4 necklaces an hour. Which of the following statements is true? a/If Orlando specializes in making bracelets and Daytona specializes in making necklaces, they could both gain by specialization and trade. b/If Orlando specializes in making necklaces and Daytona specializes in making bracelets, they could both gain by specialization and trade. c/Since Orlando has an absolute advantage in both goods, no mutual gains from trade are possible. d/Orlando should export to Daytona, but Daytona should not export to Orlando.

b/If Orlando specializes in making necklaces and Daytona specializes in making bracelets, they could both gain by specialization and trade.

If countries increase production where they have a(n) _________________ and trade with each other, both sides can benefit. a/higher cost b/comparative advantage c/cheaper labor d/absolute advantage

b/comparative advantage

Intra-industry trade between similar trading partners allows the gains from ______________________ that arise when firms and workers specialize in the production of a certain product. a/comparative advantage b/learning and innovation c/relative advantage d/creating the value chain

b/learning and innovation

One of the reasons that countries participate in international trade is that: s/labor costs are too high in some countries to efficiently produce goods. b/no single country can produce all of the goods that consumers of the country want. c/the wants of their citizens exceeds their productive capacity. d/different countries have different levels of costs.

b/no single country can produce all of the goods that consumers of the country want.

Suppose that Alaska can produce 90,000 peppermint sticks or 10,000 gallons of maple syrup in a typical workweek, while France can produce 100,000 peppermint sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude: a/Alaska has a comparative advantage in the production of peppermint sticks. b/Canada has an absolute advantage in the production of maple syrup. c/France has a comparative advantage in the production of peppermint sticks. d/Alaska has an absolute advantage in the production of maple syrup.

c/France has a comparative advantage in the production of peppermint sticks.

If Idaho could produce 1 ton of potatoes or 0.5 tons of barley per worker per year, while Maine could produce 3 tons of potatoes or 2 tons of barley per worker per year, there can be mutual gains from trade if: a/Idaho specializes in barley because of its comparative advantage in producing barley. b/Idaho specializes in barley because of its absolute advantage in producing barley. c/Idaho specializes in potatoes because of its comparative advantage in producing potatoes. d/There can be no mutual gains from trade between the 2 states.

c/Idaho specializes in potatoes because of its comparative advantage in producing potatoes.

If Willie can produce 32 tons of chocolate per year or 16 tons of almonds per year, but Hershey can produce 24 tons of chocolate per year or 12 tons of almonds. Which of the following is true? a/Hershey has a comparative advantage, but not an absolute advantage, in producing almonds. b/Willie has a comparative advantage, but not an absolute advantage, in producing chocolate. c/Willie has an absolute advantage in producing chocolate but will not trade with Hershey. d/Hershey has both a comparative and absolute advantage in producing almonds.

c/Willie has an absolute advantage in producing chocolate but will not trade with Hershey.

International trade among countries allows each country to take advantage of _________________ in other countries. a/worker productivity b/specialization c/lower opportunity costs d/economies of scale

c/lower opportunity costs

Which of the following best describes why trade benefits both sides of a trading arrangement? a/absolute advantage b/maximum profits c/opportunity cost d/cheap labor cost

c/opportunity cost

____________ matters most in determining the efficient distribution of production over the world. a/Absolute advantage. b/The allocation of resources c/Efficiency d/Comparative advantage

d/Comparative advantage

Which of the following is true? a/A nation cannot have an absolute advantage in the production of every good. b/A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. c/A nation can have a comparative advantage in the production of every good, but not an absolute advantage. d/It is impossible to have a comparative advantage in the production of all goods for a nation.

d/It is impossible to have a comparative advantage in the production of all goods for a nation.

Comparative advantage identifies the area in a graph where ___________________ greatest. a/productivity disadvantage is b/relative advantage is c/maximum cost is d/a producer's absolute advantage is relatively

d/a producer's absolute advantage is relatively

If Bob excels in all aspects of camping (faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and cleaning up) we can conclude that Bob has a(n) ____________ over all his camping friends. a/comparative advantage b/relative advantage c/opportunity cost d/absolute advantage

d/absolute advantage

When Mexico produces avocados at a lower cost than Canada, Mexico is said to have a(n) __________________ in producing avocados. a/economy of scale b/production efficiency c/relative advantage d/absolute advantage

d/absolute advantage

If China produces tea with less labor and land than any other country; then we can say that China has: a/both a comparative and absolute advantage in tea and rice production. b/a comparative advantage in tea production. c/an absolute advantage and comparative disadvantage in tea production. d/an absolute advantage in tea production

d/an absolute advantage in tea production

The gains from international trade do not just result from the absolute advantage of producing at a lower cost, but also from pursuing comparative advantage and producing ________________. a/comparative cost b/relative profit levelcost c/using cheaper labor d/at a lower opportunity cost

d/at a lower opportunity cost

The gains from international trade do not just result from the absolute advantage of producing at a lower cost, but also from pursuing comparative advantage and producing ________________. a/using cheaper labor b/relative profit level cost c/comparative cost d/at a lower opportunity cost

d/at a lower opportunity cost

Which of the following best describes the concept where as the production of output increases for a good the average costs of production declines for the good, at least up to a point. a/relative advantage b/comparative advantage c/absolute advantage d/economies of scale

d/economies of scale

According to international trade theory, a country should: a/import goods in which it has a comparative advantage. b/import goods in which it has an absolute advantage. c/export goods in which it has an absolute advantage. d/import goods in which it has a higher opportunity cost to produce.

d/import goods in which it has a higher opportunity cost to produce.