2015-08-13
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80. A rancher can produce only hamburgers, and a farmer can produce only french fries. The rancher and the farmer both like both foods. They
a. cannot gain from trade.
b. could gain from trade under certain circumstances, but not always.
c. could gain from trade because each would enjoy a greater variety of food.
d. could gain from trade only if each were indifferent between hamburgers and french fries.
ANSWER: c. could gain from trade because each would enjoy a greater variety of food.
81. Without trade
a. a country is better off.
b. a country’s production possibilities frontier is also its consumption possibilities frontier.
c. a country can still benefit from international specialization.
d. more product variety is available in a country.
ANSWER: b. a country’s production possibilities frontier is also its consumption possibilities frontier.
82. If labor in Mexico is less productive than labor in the U.S. in all areas of production,
a. neither nation can benefit from trade.
b. Mexico can benefit from trade but the U.S. cannot.
c. Mexico will not have a comparative advantage in any good.
d. both nations can benefit from trade.
ANSWER: d. both nations can benefit from trade.
For the following question(s), use the accompanying table.
Labor Hours needed to make one unit of: Amount produced in 120 hours:
Perfume Cloth Perfume Cloth
(bottles) (yards) (bottles) (yards)
Nancy 6 8 20 15
Roger 5 10 24 12
83. Refer to the tables shown. The opportunity cost of 1 bottle of perfume for Nancy is
a. 4/3 yards of cloth.
b. 3/4 yard of cloth.
c. 1 yard of cloth.
d. 1/4 yard of cloth.
ANSWER: b. 3/4 yard of cloth.
84. Refer to the tables shown. The opportunity cost of 1 bottle of perfume for Roger is
a. 3 yards of cloth.
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b. 2 yards of cloth.
c. 1/3 yard of cloth.
d. 1/2 yard of cloth.
ANSWER: d. 1/2 yard of cloth.
85. Refer to the tables shown. For Nancy the opportunity cost of 1 yard of cloth is
a. 4/3 bottles of perfume.
b. 1 bottle of perfume.
c. 3/4 bottle of perfume.
d. 1/3 bottle of perfume.
ANSWER: a. 4/3 bottles of perfume.
TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 3 RANDOM: N
86. Refer to the tables shown. For Roger the opportunity cost of 1 yard of cloth is
a. 2 bottles of perfume.
b. 1 bottle of perfume.
c. 1/2 bottle of perfume.
d. 1/4 bottle of perfume.
ANSWER: a. 2 bottles of perfume.
TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 3 RANDOM: N
87. Refer to the tables shown. Nancy has a comparative advantage in __________ and Roger has an absolute advantage in __________.
a. perfume, cloth
b. perfume, both goods
c. cloth, both goods
d. cloth, perfume
ANSWER: d. cloth, perfume
88. Refer to the tables shown. Nancy has an absolute advantage in __________________ and Roger has a comparative advantage in _______________.
a. cloth, perfume
b. perfume, cloth
c. perfume, neither good
d. cloth, cloth
ANSWER: a. cloth, perfume
89. Refer to the tables shown. Nancy has an absolute advantage in _______________ and Roger has an absolute advantage in ________________.
a. perfume, perfume
b. cloth, perfume
c. perfume, cloth
d. both goods, neither good
ANSWER: b. cloth, perfume
90. Refer to the tables shown. Nancy and Roger both could benefit by Nancy specializing in __________ and Roger specializing in __________.
a. perfume, cloth
b. cloth, perfume
c. perfume, perfume
d. cloth, cloth
ANSWER: b. cloth, perfume
TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 3 RANDOM: N
91. Refer to the tables shown. Nancy has a comparative advantage in __________ and Roger has a comparative advantage in __________.
a. cloth, perfume
b. cloth, both goods
c. cloth, neither good
d. perfume, cloth
ANSWER: a. cloth, perfume
TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 3 RANDOM: N
92. Comparative advantage is based on
a. capital costs.
b. labor costs.
c. opportunity costs.
d. dollar price.
ANSWER: c. opportunity costs.
TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: Y
93. Trade is based on
a. absolute advantage.
b. comparative advantage.
c. production costs.
d. relative dollar prices.
ANSWER: b. comparative advantage.
94. Absolute advantage is found by
a. comparing opportunity costs.
b. calculating the dollar cost of production.
c. comparing the productivity of one nation to that of another.
d. first determining which country has a comparative advantage.
ANSWER: c. comparing the productivity of one nation to that of another.
95. Trade can benefit society as a whole because it allows
a. for a more efficient use of resources.
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b. for goods to be obtained at a lower opportunity cost.
c. people to specialize in activities in which they have a comparative advantage.
d. All of the above are correct.
ANSWER: d. All of the above are correct.
96. Imports are
a. people who work in foreign countries.
b. an example of an economic model.
c. whatever is given up to obtain some item.
d. goods produced abroad and sold domestically.
ANSWER: d. goods produced abroad and sold domestically.
97. Exports are
a. a limit placed on the quantity of goods brought into a country.
b. goods produced domestically and sold abroad.
c. a country's ability to produce a good.
d. goods produced abroad and sold domestically.
ANSWER: b. goods produced domestically and sold abroad.
98. The principle of comparative advantage was developed by
a. Harry Truman.
b. David Ricardo.
c. John Maynard Keynes.
d. Adam Smith.
ANSWER: b. David Ricardo.
