Chapter 2 Practice MC Questions

Consider a society facing the production possibilities frontiers in the figure shown. Out of the options provided, which is the most likely cause of a society moving from PPF3 to PPF1?

A tornado

If a country has an absolute advantage at producing one good, which of the following is true? It cannot have an absolute advantage at producing the other good. It must also have a comparative advantage at producing both goods. It can produce more of that good than the other good. It can produce more of that good given the same resources.

It can produce more of that good given the same resources.

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato is: lower in Country A than Country B. higher in Country A than Country B. the same in both countries. impossible to calculate without more information.

higher in Country A than Country B

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is _____ for the United States than Canada, so Canada has a(n) _____ advantage at producing shoes. higher; comparative lower; comparative higher; absolute lower; absolute

higher; comparative

What limits the terms of trade that a country would find acceptable? The country's opportunity costs of production. Whether the country has an absolute advantage at producing a good. How much the country values the good for which it is trading. When the country has a comparative advantage at producing both goods.

The country's opportunity costs of production

The concepts of comparative advantage, specialization, and trade form a compelling argument in favor of: free trade. protectionism. self-sufficiency. only exporting goods and not importing goods.

free trade

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest between:

points C and D.

Suppose an American worker can make 100 nets or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 nets or catch 400 fish per day. The United States has an absolute advantage at producing both fish and nets. This means that the United States: should produce only nets and trade with Chile to get fish. should produce only fish and trade with Chile to get nets. should take advantage of Chile by trading with them. same amount of workers" to read "same number of workers.

same amount of workers" to read "same number of workers

If society were to experience an increase in its available resources, its production possibilities frontier would: shift outward. Correct shift inward. not move. become convex.

shift outward

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is a bundle of goods that Country B could not make? (400 iPhones, 250 iPads) (300 iPhones, 500 iPads) (200 iPhones, 750 iPads) (100 iPhones, 1,000 iPads)

(400 iPhones, 250 iPads)

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is a bundle of goods that Country A could not make? (250 iPhones, 250 iPads) (400 iPhones, 250 iPads) (500 iPhones, 250 iPads) (500 iPhones, 300 iPads)

(500 iPhones, 300 iPads)

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. For Jerry, the opportunity cost of building a table is _____ chairs made. 14 7 4 2

2

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one bushel of wheat is:

5 computers

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

Bangladesh should specialize in glove production because it has a comparative advantage at producing gloves.

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Which of the following statements is true? Country A has an absolute advantage at producing both avocados and t-shirts. Country B has a comparative advantage at producing t-shirts. Country B would benefit from trade, but Country A would not.

Country A has an absolute advantage at producing both avocados and t-shirts. Country B has a comparative advantage at producing t-shirts.

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Considering the production possibilities frontiers of both countries, we know that both would be willing to agree to which terms of trade?

One truck for four cars

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true? The United States has an absolute advantage at producing both shoes and apples. Canada has an absolute advantage at producing both shoes and apples. The United States has an absolute advantage at producing shoes and Canada has an absolute advantage at producing apples. Canada has an absolute advantage at producing shoes and the United States has an absolute advantage at producing apples.

The United States has an absolute advantage at producing both shoes and apples.

Suppose an American worker can make 100 nets or catch 1000 fish per day. On the other hand, a Chilean worker can produce 40 nets or catch 400 fish per day. The United States has a(n) _____ advantage at producing nets, but does not have a(n) _____ advantage at producing fish. absolute; comparative Correct comparative; absolute absolute; absolute comparative; comparative

absolute; comparative

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country B has a(n) _____ advantage at producing iPads, which means it should specialize in _____. comparative; iPads absolute; iPads comparative; iPhones absolute; iPhones

comparative; iPads

When an economist says that a country can experience gains from trade, this means it can: consume at a point outside its production possibilities frontier. increase its exports. increase the efficiency of its production. experience a bowed-out production possibilities frontier.

consume at a point outside its production possibilities frontier

When nations trade, the result would most likely be a(n):

increase in total production, which would benefit every nation involved.

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country A specializes in producing bananas and Country B specializes in producing tomatoes. Regarding the terms of trade, Country A will give no _____ than _____ for every _____. more; 5 bananas; one tomato less; 5 bananas; one tomato more; 1 tomato; 5 bananas less; 1 tomato; 5 bananas

more; 5 bananas; one tomato

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. Jerry has a comparative advantage at producing _____ because he has a _____ opportunity cost of making that good. chairs; lower chairs; higher tables; lower tables; higher

tables; lower

The slope of a production possibilities frontier measures: the opportunity cost of producing one good in terms of the other. the trade-off in the consumption of one good versus the other. how much of the resources must be used in order to produce one the goods. the inefficient production of a good.

the opportunity cost of producing one good in terms of the other.

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Considering the production possibilities frontiers of both countries, we can conclude that Country B will specialize in _____ and be willing to _____ three cars for each truck. trucks; accept no fewer than Correct cars; give no more than trucks; accept no more than cars; give no fewer than

trucks; accept no fewer than