Chapter Quiz (Ch 03)

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 The opportunity cost of 1 unit of food in Korea is

a. 1/2 of a unit of electronics.

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.

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. 3 tons of fruit.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 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.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 Korea should

a. 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 Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 The opportunity cost of 1 unit of electronics in Korea is

b. 2 units of food.

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?

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.

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 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?

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

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

b. fruit.

If a nation has an absolute advantage in the production of a good,

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

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

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

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 The opportunity cost of 1 unit of food in Australia is

c. 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 Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 The opportunity cost of 1 unit of electronics in Australia is

c. 4 units of food.

Which of the following statements is true?

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

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?

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

Which of the following statements about trade is true?

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

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

c. beef.

According to the principle of comparative advantage,

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

The following table shows the units of output a worker can produce per month in Australia and Korea. Use this table to answer question Australia: Food: 20, Electronics: 5 Korea: Food: 8, Electronics: 4 Which of the following statements about absolute advantage is true?

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

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

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