TB Part 3
. Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by a. 15 blankets and 35 meals. b. 25 blankets and 40 meals. c. 35 blankets and 45 meals. d. 50 blankets and 80 meals.
A
. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of a. 30 units of corn and 30 units of wheat. b. 40 units of corn and 30 units of wheat. c. 40 units of corn and 20 units of wheat. d. 10 units of corn and 40 units of wheat.
A
A person can benefit from specialization and trade by obtaining a good at a price that is a. lower than his or her opportunity cost of that good. b. the same as his or her opportunity cost of that good. c. higher than his or her opportunity cost of that good. d. different than his or her opportunity cost of that good.
A
Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of these pairs of points could be on Brazil's production possibilities frontier? a. (200 cashews, 30,000 peanuts) and (150 cashews, 35,000 peanuts) b. (200 cashews, 40,000 peanuts) and (150 cashews, 30,000 peanuts) c. (300 cashews, 60,000 peanut) and (200 cashews, 50,000 peanuts) d. (300 cashews, 60,000 peanuts) and (200 cashews, 80,000 peanuts)
A
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 a. Dave has a comparative advantage in the production of sweaters. b. Caroline has a comparative advantage in the production of sweaters. c. Dave has a comparative advantage in the production of socks. d. Dave has a comparative advantage in the production of both sweaters and socks.
A
For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to a. have a comparative advantage in both activities. b. have an absolute advantage in both activities. c. be more productive per unit of time in both activities. d. gain from trade with each other.
A
If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then a. Iowa has a comparative advantage in the production of corn. b. Iowa has an absolute advantage in the production of corn. c. Iowa should import corn from Oklahoma. d. Oklahoma should produce just enough corn to satisfy its own residents' demands.
A
If Shawn can produce donuts at a lower opportunity cost than Sue, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. c. Shawn should not produce donuts. d. Shawn is capable of producing more donuts than Sue in a given amount of time.
A
Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is a. 1/6 table for Ken and 1/3 table for Traci. b. 1/6 table for Ken and 3 tables for Traci. c. 6 tables for Ken and 1/3 table for Traci. d. 6 tables for Ken and 3 tables for Traci.
A
Refer to Figure 3-10. Both Alice and Betty a. face a constant trade-off between producing pitchers of lemonade and pizzas. b. can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production. c. would benefit from specializing in lemonade production. d. would benefit from specializing in pizza production
A
Refer to Figure 3-10. If point A represents Alice's production and point B represents Betty's production, a. Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. b. Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas. c. Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. d. Only Alice can benefit from specialization and trade
A
Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours? a. 225 pounds of ham and 140 pounds of cheese b. 280 pounds of ham and 100 pounds of cheese c. 355 pounds of ham and 80 pounds of cheese d. 330 pounds of ham and 60 pounds of cheese
A
Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of coffee and soybeans could Chile and Colombia together make in a given day? a. 4 pounds of coffee and 16 pounds of soybeans b. 8 pounds of coffee and 15 pounds of soybeans c. 16 pounds of coffee and 10 pounds of soybeans d. 24 pounds of coffee and 4 pounds of soybeans
A
Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of pounds of coffee and pounds of soybeans could Chile and Colombia together not make in a given day? a. 4 pounds of coffee and 17 pounds of soybeans b. 8 pounds of coffee and 14 pounds of soybeans c. 16 pounds of coffee and 9 pounds of soybeans d. 24 pounds of coffee and 3 pounds of soybeans
A
Refer to Table 3-20. What is Brad's opportunity cost of producing one bushel of wheat? a. 5/6 pound of beef b. 6/5 pounds of beef c. 3/5 pounds of beef d. 5/3 pounds of beef
A
Refer to Table 3-21. Jamaica's opportunity cost of one cooler is a. 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios. b. 0.5 radios, and Norway's opportunity cost of one cooler is 8 radios. c. 2 radios, and Norway's opportunity cost of one cooler is 0.125 radios. d. 2 radios, and Norway's opportunity cost of one cooler is 8 radios.
A
Refer to Table 3-22. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by a. 4 toothbrushes and 2 hairbrushes. b. 10 toothbrushes and 5 hairbrushes. c. 16 toothbrushes and 8 hairbrushes. d. 20 toothbrushes and 10 hairbrushes.
A
Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of a. toothbrushes and a comparative advantage in the production of toothbrushes. b. toothbrushes and a comparative advantage in the production of hairbrushes. c. hairbrushes and a comparative advantage in the production of toothbrushes. d. hairbrushes and a comparative advantage in the production of hairbrushes.
A
Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is a. 1 pound of tomatoes. b. 1 hour of labor. c. 1.5 pounds of tomatoes. d. 1.5 hours of labor
A
Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the farmer is a. 1/2 pound of pork. b. 2 hours of labor. c. 2 pounds of pork. d. 4 hours of labor.
A
Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the rancher is a. 1 pound of pork. b. 1 hour of labor. c. 1.5 pounds of pork. d. 1.5 hours of labor
A
Refer to Table 3-23. The rancher has a comparative advantage in the production of a. pork. b. tomatoes. c. both goods. d. neither good
A
Refer to Table 3-23. The rancher has an absolute advantage in the production of a. pork. b. tomatoes. c. both goods. d. neither good.
A
Refer to Table 3-24. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by a. 15. b. 20. c. 25. d. 40.
A
Refer to Table 3-24. England has a comparative advantage in the production of a. cheese and Spain has a comparative advantage in the production of bread. b. bread and Spain has a comparative advantage in the production of cheese. c. both goods and Spain has a comparative advantage in the production of neither good. d. neither good and Spain has a comparative advantage in the production of both goods.
A
Refer to Table 3-24. England should specialize in the production of a. cheese and Spain should specialize in the production of bread. b. bread and Spain should specialize in the production of cheese. c. both goods and Spain should specialize in the production of neither good. d. neither good and Spain should specialize in the production of both goods.
A
Refer to Table 3-24. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume a. 34 units of cheese and 2 units of bread and Spain will consume 6 units of cheese and 3 units of bread. b. 34 units of cheese and 2 units of bread and Spain will consume 16 units of cheese and 3 units of bread. c. 34 units of cheese and 12 units of bread and Spain will consume 6 units of cheese and 3 units of bread. d. 34 units of cheese and 12 units of bread and Spain will consume 16 units of cheese and 3 units of bread.
A
Refer to Table 3-24. The opportunity cost of 1 unit of cheese for England is a. 1/4 unit of bread. b. 1 hour of labor. c. 4 units of bread. d. 4 hours of labor.
A
Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is a. 1/2 unit of bread. b. 2 hours of labor. c. 2 units of bread. d. 4 hours of labor.
A
Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of a. 30 units of corn and 30 units of wheat. b. 40 units of corn and 30 units of wheat. c. 40 units of corn and 20 units of wheat. d. 10 units of corn and 40 units of wheat.
A
Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. a. Travis has an absolute advantage over Ricardo in trimming trees. b. Travis has a comparative advantage over Ricardo in mowing lawns. c. Ricardo has a comparative advantage over Travis in trimming trees. d. All of the above are correct
A
Which of the following statements about comparative advantage is not true? a. Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. b. The principle of comparative advantage applies to countries as well as to individuals. c. Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. d. A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.
A
. Refer to Table 3-21. Jamaica has a comparative advantage in the production of a. coolers and Norway has a comparative advantage in the production of radios. b. radios and Norway has a comparative advantage in the production of coolers. c. both goods and Norway has a comparative advantage in the production of neither good. d. neither good and Norway has a comparative advantage in the production of both goods
B
. Trade can make everybody better off because it a. increases cooperation among nations. b. allows people to specialize according to comparative advantage. c. requires some workers in an economy to be retrained. d. reduces competition among domestic companies
B
Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier? a. (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars) b. (200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars) c. (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars) d. (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)
B
Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if a. Canada requires fewer resources than the U.S. to produce a bushel of wheat. b. the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S. c. the opportunity cost of producing a bushel of wheat is lower for the U.S. than it is for Canada. d. the U.S. has an absolute advantage over Canada in producing computer software
B
Comparative advantage is related most closely to which of the following? a. output per hour b. opportunity cost c. efficiency d. bargaining strength in international trade
B
Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade? a. Alice produces more pizzas and Betty produces more lemonade. b. Alice produces more lemonade and Betty produces more pizzas. c. Both Alice and Betty produce only pizzas. d. There are no circumstances under which both Alice and Betty can benefit from specialization and trade.
B
Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then how long does it take Bonovia to make one pound of cheese? a. 3/5 hour b. 3/4 hour c. 4/3 hours d. 5/3 hours
B
Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls and making cups, then total production is a. 2 bowls and 6 cups. b. 3 bowls and 7 cups. c. 4 bowls and 8 cups. d. 6 bowls and 14 cups.
B
Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together make in a given 4-hour production period? a. 1 bowl and 14 cups b. 2 bowls and 11 cups c. 3 bowls and 10 cups d. 5 bowls and 5 cups
B
Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is a. 12 pounds of coffee and 12 pounds of soybeans. b. 14 pounds of coffee and 9 pounds of soybeans. c. 16 pounds of coffee and 6 pounds of soybeans. d. 28 pounds of coffee and 18 pounds of soybeans
B
Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is a. 15 bolts and 40 nails. b. 25 bolts and 70 nails. c. 30 bolts and 80 nails. d. 50 bolts and 140 nails.
B
Refer to Table 3-20. Assume that Brad and Theresa each has 60 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is a. 6 bushels of wheat and 6 pounds of beef. b. 10 bushels of wheat and 5 pounds of beef. c. 10 bushels of wheat and 6 pounds of beef. d. 6 bushels of wheat and 5 pounds of beef
B
Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other? a. 12 bushels of wheat for 6 pounds of beef b. 12 bushels of wheat for 8 pounds of beef c. 12 bushels of wheat for 12 pounds of beef d. Brad and Theresa could not both gain from trade with each other at any price
B
Refer to Table 3-20. Brad has a comparative advantage in the production of a. wheat and Theresa has a comparative advantage in the production of beef. b. beef and Theresa has a comparative advantage in the production of wheat. c. both goods and Theresa has a comparative advantage in the production of neither good. d. neither good and Theresa has a comparative advantage in the production of both goods.
B
Refer to Table 3-20. Brad should specialize in the production of a. wheat and Theresa should specialize in the production of beef. b. beef and Theresa should specialize in the production of wheat. c. both goods and Theresa should specialize in the production of neither good. d. neither good and Theresa should specialize in the production of both goods.
B
Refer to Table 3-20. What is Brad's opportunity cost of producing one pound of beef? a. 5/6 bushel of wheat b. 6/5 bushels of wheat c. 3/5 bushels of wheat d. 5/3 bushels of wheat
B
Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of coolers increased by a. 12. b. 24. c. 36. d. 48.
B
Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by a. 3. b. 6. c. 9. d. 12.
B
Refer to Table 3-21. At which of the following prices would both Jamaica and Norway gain from trade with each other? a. 1 radio for 1 cooler b. 1 radio for 4 coolers c. 1 radio for 10 coolers d. Jamaica and Norway would both gain from trade at all of the above prices
B
Refer to Table 3-21. Jamaica has an absolute advantage in the production of a. coolers and Norway has an absolute advantage in the production of radios. b. radios and Norway has an absolute advantage in the production of coolers. c. both goods and Norway has an absolute advantage in the production of neither good. d. neither good and Norway has an absolute advantage in the production of both goods.
B
Refer to Table 3-21. Jamaica should specialize in the production of a. coolers and Norway should specialize in the production of radios. b. radios and Norway should specialize in the production of coolers. c. both goods and Norway should specialize in the production of neither good. d. neither good and Norway should specialize in the production of both goods.
B
Refer to Table 3-22. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by a. 4 toothbrushes and 2 hairbrushes. b. 10 toothbrushes and 5 hairbrushes. c. 16 toothbrushes and 8 hairbrushes. d. 20 toothbrushes and 10 hairbrushes.
B
Refer to Table 3-22. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision? a. 0.3 hairbrush b. 3 hairbrushes c. 30 hairbrushes d. 100 hairbrushes
B
Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is a. 4 pounds of pork and 6 pounds of tomatoes. b. 6 pounds of pork and 8 pounds of tomatoes. c. 4 pounds of pork and 8 pounds of tomatoes. d. 6 pounds of pork and 6 pounds of tomatoes.
B
Refer to Table 3-23. The farmer has a comparative advantage in the production of a. pork. b. tomatoes. c. both goods. d. neither good
B
Refer to Table 3-23. The farmer has an absolute advantage in the production of a. pork. b. tomatoes. c. both goods. d. neither good
B
Refer to Table 3-23. The farmer should specialize in the production of a. pork and the rancher should specialize in the production of tomatoes. b. tomatoes and the rancher should specialize in the production of pork. c. both goods and the rancher should specialize in the production of neither good. d. neither good and the rancher should specialize in the production of both goods.
B
Refer to Table 3-24. Without trade, England produced and consumed 32 units of cheese and 2 units of bread and Spain produced and consumed 6 units of cheese and 2 units of bread. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 7 units of cheese for 2.5 units of bread. As a result, England gained a. 0 units of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread. b. 1 unit of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread. c. 7 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of bread. d. 33 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of bread.
B
Specialization and trade are closely linked to a. absolute advantage. b. comparative advantage. c. gains to some traders that exactly offset losses to other traders. d. shrinkage of the economic pie.
B
Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is a. 0.63 bushels of squash. b. 1.6 bushels of squash. c. 3 bushels of squash. d. 5 bushels of squash.
B
Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is a. 2/5 bushel of squash. b. 5/2 bushels of squash. c. 2 bushels of squash. d. 5 bushels of squash.
B
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 280 bushels of corn and 450 bushels of oats. b. 340 bushels of corn and 500 bushels of oats. c. 360 bushels of corn and 520 bushels of oats. d. 360 bushels of corn and 640 bushels of oats
B
Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours? a. 250 pounds of ham and 120 pounds of cheese b. 200 pounds of ham and 160 pounds of cheese c. 160 pounds of ham and 200 pounds of cheese d. 100 pounds of ham and 240 pounds of cheese
C
. Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together not make in a given 4-hour production period? a. 3 bowls and 9.5 cups b. 4.5 bowls and 6 cups c. 5 bowls and 4 cups d. 6 bowls and 1 cups
D
Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. For many years the two countries traded, each completely specializing according to their respective comparative advantages. Now, however, war has broken out between them and all trade has stopped. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. The war has caused the combined yearly output of the two countries to decline by a. 10 units of corn and 10 units of wheat. b. 20 units of corn and 20 units of wheat. c. 30 units of corn and 30 units of wheat. d. 40 units of corn and 40 units of wheat.
B
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be a. 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. b. 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. c. 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. d. 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.
B
The opportunity cost of an item is a. the number of hours that one must work in order to buy one unit of the item. b. what you give up to get that item. c. always less than the dollar value of the item. d. always greater than the cost of producing the item.
B
Total output in an economy increases when each person specializes because a. there is less competition for the same resources. b. each person spends more time producing that product in which he or she has a comparative advantage. c. a wider variety of products will be produced within each country due to specialization. d. government necessarily plays a larger role in the economy due to specialization.
B
. Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible? a. Kelly has a comparative advantage in repairing cars and David has a comparative advantage in cooking meals. b. Kelly has an absolute advantage in repairing cars and David has an absolute advantage in cooking meals. c. Kelly has a comparative advantage in repairing cars and in cooking meals. d. David has an absolute advantage in repairing cars and in cooking meals.
C
. Refer to Table 3-20. What is Theresa's opportunity cost of producing one bushel of wheat? a. 5/6 pound of beef b. 6/5 pound of beef c. 3/5 pound of beef d. 5/3 pounds of beef
C
. Refer to Table 3-21. Jamaica and Norway would not be able to gain from trade if Norway's opportunity cost of one radio changed to a. 0 coolers. b. 1 cooler. c. 2 coolers. d. Jamaica and Norway can always gain from trade regardless of their opportunity costs.
C
. Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would a. make sense if Xenophobia had an absolute advantage in all goods. b. make sense if Xenophobia had no absolute advantages in any good. c. not make sense as long as Xenophobia had a comparative advantage in some good. d. not make sense as long as Xenophobia had an absolute advantage in at least half the goods that could be traded.
C
A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton a. is equal to 0. b. is between 0 and 1. c. is equal to 1. d. is greater than 1.
C
Absolute advantage is found by comparing different producers' a. opportunity costs. b. payments to land, labor, and capital. c. input requirements per unit of output. d. locational and logistical circumstances.
C
If Shawn can produce more donuts in one day than Sue can produce in one day, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. c. Shawn has an absolute advantage in the production of donuts. d. Sue has an absolute advantage in the production of donuts.
C
If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that a. if he devotes all of his available resources to watermelon production, then he can produce 80 watermelons. b. he cannot have a comparative advantage over other farmers in producing cantaloupes. c. his opportunity cost of one watermelon is 2/3 of a cantaloupe. d. his production possibilities frontier is bowed-out.
C
Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that a. Ken has an absolute advantage in chairs. b. Ken has a comparative advantage in tables. c. Traci has an absolute advantage in chairs. d. Traci has a comparative advantage in chairs.
C
Refer to Figure 3-10. If Alice produces only lemonade, she can produce a. 200 pitchers per day. b. 300 pitchers per day. c. 400 pitchers per day. d. 450 pitchers per day.
C
Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of pork for 2 pounds of tomatoes, then a. the farmer and the rancher will both gain from this trade. b. the farmer will gain from this trade, but the rancher will not. c. the rancher will gain from this trade, but the farmer will not. d. neither the farmer nor the rancher will gain from this trade
C
Refer to Table 3-23. The opportunity cost of 1 pound of pork for the farmer is a. 1/2 pound of tomatoes. b. 1/2 hour of labor. c. 2 pounds of tomatoes. d. 2 hours of labor.
C
Refer to Table 3-23. Without trade, the farmer produced and consumed 2 pounds of pork and 4 pounds of tomatoes and the rancher produced and consumed 4 pounds of pork and 2 pounds of tomatoes. Then, each person agreed to specialize in the production of the good in which he has a comparative advantage and trade 4 pounds of pork for 6 pounds of tomatoes. As a result, a. the farmer gained 3 hours worth of production and the rancher gained 4 hours worth of production. b. the farmer gained 4 hours worth of production and the rancher gained 6 hours worth of production. c. the farmer gained 6 hours worth of production and the rancher gained 8 hours worth of production. d. the farmer gained 8 hours worth of production and the rancher gained 10 hours worth of production.
C
Refer to Table 3-24. At which of the following prices would both England and Spain gain from trade with each other? a. 16 units of bread for 16 units of cheese b. 16 units of bread for 24 units of cheese c. 16 units of bread for 48 units of cheese d. England and Spain could not both gain from trade with each other at any price.
C
Refer to Table 3-24. England has an absolute advantage in the production of a. cheese and Spain has an absolute advantage in the production of bread. b. bread and Spain has an absolute advantage in the production of cheese. c. both goods and Spain has an absolute advantage in the production of neither good. d. neither good and Spain has an absolute advantage in the production of both goods.
C
Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is a. 1/4 unit of cheese. b. 1/4 hour of labor. c. 4 units of cheese. d. 4 hours of labor.
C
Refer to Table 3-24. The opportunity cost of 1 unit of bread for Spain is a. 1/2 unit of cheese. b. 1/2 hour of labor. c. 2 units of cheese. d. 8 hours of labor.
C
Refer to Table 3-25. The opportunity cost of 1 mixer for Maya is a. 0.625 toasters. b. 5 hours of labor. c. 1.6 toasters. d. 20 hours of labor
C
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true? a. Both countries could gain from trade with each other. b. Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods. c. Neither country could gain from trade with each other because neither one has a comparative advantage. d. Oatland could gain from trade between the two countries, but Cornland definitively would lose.
C
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year. Each nation has 100 workers, and each country specializes according to the principle of comparative advantage. If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year, then each country's maximum consumption of new radios and televisions per year will be a. higher than it would be in the absence of trade because of the gains from trade. b. the same as it would be in the absence of trade. c. less than it would be in the absence of trade because neither country is specializing in the product in which it has a comparative advantage. d. less than it would be in the absence of trade because Teeveeland has an absolute advantage in both goods and so it cannot benefit by trading with Radioland.
C
The gains from trade are a. evident in economic models, but seldom observed in the real world. b. evident in the real world, but impossible to capture in economic models. c. a result of more efficient resource allocation than would be observed in the absence of trade. d. based on the principle of absolute advantage.
C
The principle of comparative advantage does not provide answers to certain questions. One of those questions is a. Do specialization and trade benefit more than one party to a trade? b. Is it absolute advantage or comparative advantage that really matters? c. How are the gains from trade shared among the parties to a trade? d. Is it possible for specialization and trade to increase total output of traded goods?
C
The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good, a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. b. has a comparative advantage in the production of that good. c. has an absolute advantage in the production of that good. d. should be the only producer of that good.
C
Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity? a. One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier. b. One individual is faster at both activities than the other individual. c. One individual's opportunity costs are the same as the other individual's opportunity costs. d. None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.
C
What must be given up to obtain an item is called a. out-of-pocket cost. b. comparative worth. c. opportunity cost. d. absolute value.
C
When describing the opportunity cost of two producers, economists use the term a. natural advantage. b. trading advantage. c. comparative advantage. d. absolute advantage.
C
When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. falls. b. stays the same. c. rises. d. may fall, rise, or stay the same.
C
. Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together not make in a given 2-day production period? a. 9 bolts and 122 nails b. 21 bolts and 98 nails c. 36 bolts and 56 nails d. 47 bolts and 18 nails
D
. Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. a. Susan has an absolute advantage over Paul in washing windows. b. Susan has a comparative advantage over Paul in washing windows. c. Paul has a comparative advantage over Susan in ironing shirts. d. All of the above are correct.
D
Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then a. the two countries' combined output of both goods will be higher than it would be in the absence of trade. b. Greece will produce more fish than it would produce in the absence of trade. c. Germany will produce more cars than it would produce in the absence of trade. d. All of the above are correct.
D
If Korea is capable of producing either shoes or soccer balls or some combination of the two, then a. Korea should specialize in the product in which it has an absolute advantage. b. it would be impossible for Korea to have an absolute advantage over another country in both products. c. it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods. d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
D
If labor in Mexico is less productive than labor in the United States in all areas of production, a. then neither nation can benefit from trade. b. then Mexico can benefit from trade but the United States cannot. c. then the United States will have a comparative advantage relative to Mexico in the production of all goods. d. then both Mexico and the United States still can benefit from trade
D
Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is a. 1/6 chair for Ken and 1/3 chair for Traci. b. 1/6 chair for Ken and 3 chairs for Traci. c. 6 chairs for Ken and 1/3 chair for Traci. d. 6 chairs for Ken and 3 chairs for Traci.
D
Refer to Figure 3-12. If Argentina and Peru each divides its time equally between producing corn and fish, then total production is a. 13 tons of corn and 15 tons of fish. b. 13 tons of corn and 10 tons of fish. c. 12 tons of corn and 16 tons of fish. d. 12 tons of corn and 11 tons of fish
D
Refer to Figure 3-7. If Bintu and Juba both spend all of their time making bowls, then total production is a. 2 bowls. b. 3 bowls. c. 4 bowls. d. 6 bowls.
D
Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together make in a given 2- day production period? a. 12 bolts and 120 nails b. 24 bolts and 96 nails c. 38 bolts and 50 nails d. 44 bolts and 24 nails
D
Refer to Table 3-20. Brad has an absolute advantage in the production of a. wheat and Theresa has an absolute advantage in the production of beef. b. beef and Theresa has an absolute advantage in the production of wheat. c. both goods and Theresa has an absolute advantage in the production of neither good. d. neither good and Theresa has an absolute advantage in the production of both goods.
D
Refer to Table 3-20. What is Theresa's opportunity cost of producing one pound of beef? a. 5/6 bushel of wheat b. 6/5 bushel of wheat c. 3/5 bushel of wheat d. 5/3 bushels of wheat
D
Refer to Table 3-21. Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision? a. 3 coolers b. 6 coolers c. 12 coolers d. 24 coolers
D
Refer to Table 3-22. Portugal has an absolute advantage in the production of a. toothbrushes and a comparative advantage in the production of toothbrushes. b. toothbrushes and a comparative advantage in the production of hairbrushes. c. hairbrushes and a comparative advantage in the production of toothbrushes. d. hairbrushes and a comparative advantage in the production of hairbrushes.
D
Refer to Table 3-22. Zimbabwe's opportunity cost of one hairbrush is a. 3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush. b. 3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes. c. 10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush. d. 10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.
D
Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then a. Tom must have an absolute advantage in the production of baseball bats. b. Jim must have an absolute advantage in the production of baseball bats. c. Tom has a comparative advantage in the production of baseball bats. d. Jim has a comparative advantage in the production of baseball bats.
D
Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible? a. Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks. b. Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks. c. Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats. d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks
D
Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year, and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year. There are 20 workers in Agland and 10 workers in Zenland. Currently the two countries do not trade. Agland produces and consumes 100 units of grain and 20 units of incense per year. Zenland produces and consumes 50 units of grain and no incense per year. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 30 units of grain and 100 units of incense. b. 30 units of grain and 150 units of incense. c. 50 units of grain and 90 units of incense. d. 50 units of grain and 130 units of incense.
D
The principle of comparative advantage does not provide answers to certain questions. One of those questions is a. Is it possible for specialization and trade to benefit more than one party to a trade? b. Is it possible for specialization and trade to increase total output of traded goods? c. Do opportunity costs play a role in people's decisions to specialize in certain activities? d. What determines the price at which trade takes place?
D
Which of the following is not correct? a. The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. c. The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. d. The gains from specialization and trade are based not on comparative advantage but on absolute advantage.
D
Which of the following statements is not correct? a. Trade allows for specialization. b. Trade has the potential to benefit all nations. c. Trade allows nations to consume outside of their production possibilities curves. d. Absolute advantage is the driving force of specialization
D
