ECON Ch. 3

The opportunity cost of 1 unit of clothing is: (view image 3.2-7) a. 1 unit of food for Andy and 3/2 units of food for Debbie. b. 1 unit of food for Andy and 2/3 units of food for Debbie. c. the same for both Andy and Debbie. d. impossible to determine from the information provided.

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

If Scottie can produce potato chips at a lower opportunity cost than Peyton, then: a. Scottie has a comparative advantage in the production of potato chips. a. Scottie has a comparative advantage in the production of potato chips. b. Peyton has a comparative advantage in the production of potato chips. c. Scottie has an absolute advantage in the production of potato chips. d. Peyton has an absolute advantage in the production of potato chips.

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

An export is a good or service produced in the domestic country, but sold in the foreign country. a. True b. False

a. True

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

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

For Russia, the opportunity cost of producing one motorcycle is: (view image 3.2-9) a. 1/4 computer. b. 1/2 computer. c. 2 computers. d. 4 computers.

b. 1/2 computer.

A country has a trade deficit when the dollar value of exported goods and services exceeds the dollar value of imported goods and services. a. True b. False

b. False

An import is a good or service produced in the domestic country, but sold in the foreign country. a. True b. False

b. False

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

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

If the U.S. has both an absolute and a comparative advantage in the production of solar panels, it should: a. import solar panels produced in other countries. b. export solar panels to other countries. c. subsidize the solar panel industry. d. levy import tariffs on solar panels.

b. export solar panels to other countries.

According to the principle of comparative advantage, both Germany and Russia can gain from specialization and trade if Germany specializes in the production of ___ and Russia specializes in the production of __. (view image 3.2-10) a. both goods; neither good b. motorcycles; computers c. neither good; both goods d. computers; motorcycles

b. motorcycles; computers

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

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

If Andy and Debbie each specialize according to comparative advantage, their combined output will be _ units of clothing and _ units of food. (view image 3.2-8) a. 10; 10 b. 20; 10 c. 10; 30 d. 20; 30

c. 10; 30

If Janet can produce more baskets per hour than Karen, then: a. Janet has a comparative advantage in the production of baskets. b. Karen has a comparative advantage in the production of baskets. c. Janet has an absolute advantage in the production of baskets. d. Karen has an absolute advantage in the production of baskets.

c. Janet has an absolute advantage in the production of baskets.

Goods and services produced in Mexico and consumed in the U.S. are ____ for the U.S. and ____ for Mexico. a. exports; imports b. exports; exports c. imports; exports d. imports; imports

c. imports; exports

Andy has an absolute advantage in ____ and a comparative advantage in ____. (view image 3.2-6) a. neither good; food b. both goods; food c. neither good; clothing d. both goods; clothing

c. neither good; clothing

A tax levied on imports is called a: a. subsidy. b. trade treaty. c. tariff. d. quota.

c. tariff.

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

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

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

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

A legal limit on the quantity of a product that can be imported from other countries is called a: a. subsidy b. trade treaty. c. tariff. d. quota.

d. quota.

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

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