Chapter 3 Quiz: Interdependence and the Gains from Trade

(THE SAME TABLE AS BEFORE WITH GERMANY AND POLAND) The opportunity cost of 1 unit of computers in Poland is _____. a. 2 units of wheat b. 1/2 of a unit of wheat c. 1/4 of a unit of wheat d. 4 units of wheat

a. 2 units of wheat

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the questions Wheat Computers Germany 20. 5 Poland 8 4 Which of the following statements about absolute advantage is true? a. Germany has an absolute advantage in the production of both wheat and computers. b. Poland has an absolute advantage in the production of wheat, while Germany has an absolute advantage in the production of computers. c. Poland has an absolute advantage in the production of both wheat and computers. d. Germany has an absolute advantage in the production of wheat while Poland has an absolute advantage in the production of computers.

a. Germany has an absolute advantage in the production of both wheat and computers.

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 answer choices are correct.

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

Suppose a country's workers can produce 4 pens per hour or 12 pencils per hour. If there is no trade, _______. a. the opportunity cost of 1 pen is 3 pencils b. the opportunity cost of 1 pen is 1/4 of a pencil c. the opportunity cost of 1 pen is 12 pencils d. the opportunity cost of 1 pen is 4 pencils e. The opportunity cost of 1 pen is 1/3 of a pencil.

a. the opportunity cost of 1 pen is 3 pencils

(The Same as before with Germany, Poland, and Wheat, Computers) The Opportunity cost of 1 unit of computers in Germany is a. 1/5 of a unit of wheat b. 4 units of wheat c. 1/4 of a unit of wheat d. 5 units of wheat

b. 4 units of wheat

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 answer choices are correct.

b. It can produce that good using fewer resources than its trading partner

(SAME TABLE) The opportunity cost of 1 unit of wheat in Poland is ______. a. 4 units of computers b. 2 units of computers c. 1/2 of a unit of computers d. 1/4 of a unit of computers

c. 1/2 of a unit of computers

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

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

Which of the following statements about trade is true? a. People that are skilled at all activities cannot benefit from trade. 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. Trade can benefit everyone in society because it allows people to specialise in activities in which they have an absolute advantage.

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

(SAME TABLE, AGAIN of GERMANY and POLAND) The opportunity cost of 1 unit of wheat in Germany is _______. a. 1/5 of a unit of computers b. 4 units of computers c. 5 units of computers e. 1/4 of a unit of computers.

d. 1/4 of a unit of computers

According to the principle of comparative advantage, ________. a. countries with a comparative advantage in the production of every good need not specialize b. countries should specialize in the production of goods for which they use fewer resources than their trading partners. c. countries should specialize in the production of goods that they enjoy consuming d. countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners

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

Suppose a country's workers can produce 4 pens per hour or 12 pencils per hour. If there is no trade, _____. a. the domestic price of 1 pencil is 3 pens b. the domestic price of 1 pencil is 1/4 of a pen c. the domestic price of 1 pencil is 4 pens d. the domestic price of 1 pencil is 12 pens e. the domestic price of 1 pencil is 1/3 of a pen

e. the domestic price of 1 pencil is 1/3 of a pen