micro chapter 3 quiz

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 with a comparative advantage in the production of every good need not specialize 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 use fewer resources in production than their trading partners

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

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 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? a. If Canada has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of clothing. b. If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing. c. If Canada has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing. d. If Canada 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 answer choices are correct.

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

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

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? a. Shahina should not hire an assistant because the assistant cannot type as fast as she can. b. Shahina should hire the assistant as long as she pays the assistant less than $100 per hour. c. Shahina should hire the assistant as long as she pays the assistant less than $25 per hour. d. None of the answer choices are correct.

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

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

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

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. People that are skilled at all activities cannot benefit from trade. d. 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 specialize in activities in which they have a comparative advantage.

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 1/4 of a pencil b. the opportunity cost of 1 pen is 4 pencils c. the opportunity cost of 1 pen is 1/3 of a pencil d. the opportunity cost of 1 pen is 3 pencils e. the opportunity cost of 1 pen is 12 pencils

d. the opportunity cost of 1 pen is 3 pencils

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 12 pens b. the domestic price of 1 pencil is 4 pens c. the domestic price of 1 pencil is 1/4 of a pen d. the domestic price of 1 pencil is 3 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