Chapter Three

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 The opportunity cost of 1 unit of wheat in Poland is ________.

1/2 of a unit of computers

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 The opportunity cost of 1 unit of wheat in Germany is ________.

1/4 of a unit of computers

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 The opportunity cost of 1 unit of computers in Poland is ________.

2 units of wheat

The opportunity cost of producing 1 metric ton of beef in Colombia is ________.

3 tons of fruit

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 Which of the following statements about comparative advantage is true?

Germany has a comparative advantage in the production of wheat, while Poland has a comparative advantage in the production of computers.

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 Which of the following statements about absolute advantage is true?

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

Suppose the world consists of two countries— Canada and Mexico. Furthermore, suppose there are only two goods—food and clothing. Which of the following statements is true?

If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing.

Shahina is a tax accountant. She receives $100 per hour doing tax returns. She can type 10,000 characters per hour into spreadsheets. She can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?

Shahina should hire the assistant as long as she pays the assistant less than $25 per hour.

Which of the following statements about trade is true?

Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage.

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 Prices of computers can be stated in terms of units of wheat. What is the range of prices of computers for which both countries could gain from trade?

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

Brazil has a comparative advantage in the production of ________.

beef

According to the principle of comparative advantage, ________.

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

Colombia will export ________.

fruit

If a nation has a comparative advantage in the production of a good, ________.

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, ________.

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

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 Poland should ________.

specialize in computers production, export computers, and import wheat

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

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

The following table shows the units of output a worker can produce per month in Germany and Poland. Use this table to answer the question. Wheat Computers Germany 20 5 Poland 8 4 The opportunity cost of 1 unit of computers in Germany is ________.

4 units of wheat

Which of the following statements is true?

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

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

the opportunity cost of 1 pen is 3 pencils