CH3 Practice Quiz

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

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 12 watches. b. the domestic price of 1 ring is 1/4 of a watch. c. the domestic price of 1 ring is 1/3 of a watch. d. the domestic price of 1 ring is 3 watches. e. the domestic price of 1 ring is 4 watches.

d. 4 units of food.

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

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

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 12 rings. b. the opportunity cost of 1 watch is 4 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.

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.

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. 2 units of food.

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

d. 1/2 of a unit of electronics.

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

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

According to the principle of comparative advantage, a. countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners. b. countries should specialize in the production of goods for which they use fewer resources in production than their trading partners. 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.

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

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 than its trading partner. c. it can benefit by restricting imports of that good. d. it must be the only country with the ability to produce that good. e. none of the above is true.

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

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

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.

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

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

a. The price must be greater than 2 units of food but less than 4 units of food.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Prices of electronics can be stated in terms of units of food. What is the range of prices of electronics for which both countries could gain from trade? a. The price must be greater than 2 units of food but less than 4 units of food. b. The price must be greater than 1/4 of a unit of food but less than 1/2 of a unit of food. c. The price must be greater than 1/5 of a unit of food but less than 1/4 of a unit of food. d. The price must be greater than 4 units of food but less than 5 units of food.

b. 1/4 of a unit of electronics.

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

c. Australia has an absolute advantage in the production of both food and electronics.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Which of the following statements about absolute advantage is true? a. Australia has an absolute advantage in the production of food while Korea has an absolute advantage in the production of electronics. b. Korea has an absolute advantage in the production of both food and electronics. c. Australia has an absolute advantage in the production of both food and electronics. d. Korea has an absolute advantage in the production of food while Australia has an absolute advantage in the production of electronics.

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

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question 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.

c. beef.

Use the production possibilities frontiers in Exhibit to answer. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Argentina has a comparative advantage in the production of a. both fruit and beef. b. fruit. c. beef. d. neither fruit nor beef.

b. fruit.

Use the production possibilities frontiers in Exhibit to answer. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Peru will export a. both fruit and beef. b. fruit. c. beef. d. neither fruit nor beef.

e. 3 tons of fruit.

Use the production possibilities frontiers in Exhibit to answer. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. The opportunity cost of producing 1 metric ton of beef in Peru is a. 2 tons of fruit. b. 6 tons of fruit. c. 1 ton of fruit. d. 1/3 ton of fruit. e. 3 tons of fruit.

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

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

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

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