Question 1

If each of us had to grow all of our own food:

Accepted Answer

A)  civilization would collapse and billions of people would starve. 
B)  we would have more time for other pursuits. 
C)  people would be richer since they would no longer have to spend money on groceries. 
D)  the total amount of knowledge in society would increase since everyone would have to learn about farming. 
A)  civilization would collapse and billions of people would starve. 
B)  we would have more time for other pursuits. 
C)  people would be richer since they would no longer have to spend money on groceries. 
D)  the total amount of knowledge in society would increase since everyone would have to learn about farming.

Question 2

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}
\text { Labor Hours Needed to Make One }\
\begin{array} { l c c c c } 
&  { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \
\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \
\hline \text { Italy } & 10 & 4 & 4 & 10 \
\text { Belgium } & 2 & 8 & 20 & 5 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of pasta for Belgium is:

Accepted Answer

A)  5 pounds of linen. 
B)  20 pounds of linen. 
C)  1/4 pound of linen. 
D)  4 pounds of linen. 
A)  5 pounds of linen. 
B)  20 pounds of linen. 
C)  1/4 pound of linen. 
D)  4 pounds of linen.

Question 3

The production possibilities frontier shows:

Accepted Answer

A)  the combinations of outputs a country can produce given its resources and productivity. 
B)  the combinations of inputs that a country has given its outputs and productivity. 
C)  the combinations of outputs and resources that a country possesses given its productivity. 
D)  the maximum level of a country's productivity given its resources and outputs. 
A)  the combinations of outputs a country can produce given its resources and productivity. 
B)  the combinations of inputs that a country has given its outputs and productivity. 
C)  the combinations of outputs and resources that a country possesses given its productivity. 
D)  the maximum level of a country's productivity given its resources and outputs.

Question 4

A country or individual that is best at doing something should always undertake that activity to maximize gains from trade.

Accepted Answer

A) True 
 B)False

Question 5

In a two-country world of Japan and South Korea, suppose Japan can produce 600 radios or 300 TV sets in one day with all its available resources, while South Korea can produce 100 radios or 200 TV sets in one day with all its available resources. According to the theory of comparative advantage, what would be the possible gain in this world if the two countries specialize and trade with each other?

Accepted Answer

For Japan, the opportunity cost of produ

Question 6

Large cities should have more professional closet organizers than small cities.

Accepted Answer

A) True 
 B)False

Question 7

Briefly describe a few activities that a typical student might do on any given day that reflect the effects of globalization.

Accepted Answer

This answer would of course be personali

Question 8

According to the theory of comparative advantage:

Accepted Answer

A)  every country can produce some good with a lower opportunity cost. 
B)  every country should produce goods that involve high opportunity costs. 
C)  some countries have a comparative advantage in producing every good. 
D)  some countries should import every good from other countries. 
A)  every country can produce some good with a lower opportunity cost. 
B)  every country should produce goods that involve high opportunity costs. 
C)  some countries have a comparative advantage in producing every good. 
D)  some countries should import every good from other countries.

Question 9

In a certain country it takes five of its 10 workers to produce one barrel of wine but only one worker to produce one yard of cloth. If we graphed this country's PPF (placing wine on the vertical axis and cloth on the horizontal axis), the slope of the PPF would equal -1/5.

Accepted Answer

A) True 
 B)False

Question 10

Adam Smith said, "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor." Which of the following concepts best illustrates Smith's intent with this statement?

Accepted Answer

A)  comparative advantage 
B)  incentives matter 
C)  scarcity 
D)  production possibilities frontier 
A)  comparative advantage 
B)  incentives matter 
C)  scarcity 
D)  production possibilities frontier

Question 11

Figure: Benin   In the figure, Benin has 32 workers, and the price per ton of cotton and ton of rice is $2,500 and $1,200, respectively. The average wage with no trade is ______, and the average wage with trade is ________.

Accepted Answer

A)  $850; $1,081.25 
B)  $768.75; $1,000 
C)  $1,000; $850 
D)  $1,000; $1,081.25 
A)  $850; $1,081.25 
B)  $768.75; $1,000 
C)  $1,000; $850 
D)  $1,000; $1,081.25

Question 12

Your professor hires a teaching assistant to grade student assignments even though he may do the task faster and perhaps more accurately. How can you explain this behavior using the theory of comparative advantage?

Accepted Answer

According to the theory of comparative a

Question 13

Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. What are each country's opportunity costs of producing iPods?

Accepted Answer

A)  Brazil: 4 units of sugar cane; China: 2 units of sugar cane 
B)  Brazil: 8 units of sugar cane; China: 2 units of sugar cane 
C)  Brazil: 1/8 unit of sugar cane; China: 1/2 unit of sugar cane 
D)  Brazil: 1/2 unit of sugar cane; China: 1/2 unit of sugar cane 
A)  Brazil: 4 units of sugar cane; China: 2 units of sugar cane 
B)  Brazil: 8 units of sugar cane; China: 2 units of sugar cane 
C)  Brazil: 1/8 unit of sugar cane; China: 1/2 unit of sugar cane 
D)  Brazil: 1/2 unit of sugar cane; China: 1/2 unit of sugar cane

Question 14

Trade increases productivity when production is carried out by the person/group with the comparative advantage.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer questions: Figure: PPF Nickel & Textiles  
-(Figure: PPF Nickel & Textiles) Refer to the figure. What is the maximum amount of textiles China can produce?

Accepted Answer

A)  10 tons 
B)  8 tons 
C)  6 tons 
D)  4 tons 
A)  10 tons 
B)  8 tons 
C)  6 tons 
D)  4 tons

Question 16

According to the theory of comparative advantage, a country specializes in producing goods with lower opportunity costs than in another country.

Accepted Answer

A) True 
 B)False

Question 17

The Dark Ages was a period in which trade:

Accepted Answer

A)  expanded because of rising transportation and communication costs. 
B)  expanded because of falling transportation and communication costs. 
C)  decreased because world markets became more isolated. 
D)  decreased because world markets became less isolated. 
A)  expanded because of rising transportation and communication costs. 
B)  expanded because of falling transportation and communication costs. 
C)  decreased because world markets became more isolated. 
D)  decreased because world markets became less isolated.

Question 18

The basic idea of trade is to buy the things you could only make at a high opportunity cost, and sell the things you can make at a low opportunity cost.

Accepted Answer

A) True 
 B)False

Question 19

Conan O'Brien hosts the Conan show and Andy Richter, his sidekick, writes for it. Conan needs 4 hours to rehearse and host a good show. It takes Andy 10 hours to do the same. Conan writes one usable joke in an hour, but Andy needs 2 hours to do the same. Andy's opportunity cost of rehearsing and hosting a show is:

Accepted Answer

A)  0.2 usable jokes. 
B)  0.5 usable jokes. 
C)  4 usable jokes. 
D)  5 usable jokes. 
A)  0.2 usable jokes. 
B)  0.5 usable jokes. 
C)  4 usable jokes. 
D)  5 usable jokes.

Question 20

Wage rates are primarily based on the:

Accepted Answer

A)  level of comparative advantage. 
B)  extent to which the country is involved in trade with other countries. 
C)  productivity of labor. 
D)  institutional factors present. 
A)  level of comparative advantage. 
B)  extent to which the country is involved in trade with other countries. 
C)  productivity of labor. 
D)  institutional factors present.

Exam 2: The Power of Trade and Comparative

If each of us had to grow all of our own food:

The production possibilities frontier shows:

A country or individual that is best at doing something should always undertake that activity to maximize gains from trade.

Large cities should have more professional closet organizers than small cities.

Briefly describe a few activities that a typical student might do on any given day that reflect the effects of globalization.

According to the theory of comparative advantage:

In a certain country it takes five of its 10 workers to produce one barrel of wine but only one worker to produce one yard of cloth. If we graphed this country's PPF (placing wine on the vertical axis and cloth on the horizontal axis), the slope of the PPF would equal -1/5.

Figure: Benin In the figure, Benin has 32 workers, and the price per ton of cotton and ton of rice is $2,500 and $1,200, respectively. The average wage with no trade is ______, and the average wage with trade is ________.

Your professor hires a teaching assistant to grade student assignments even though he may do the task faster and perhaps more accurately. How can you explain this behavior using the theory of comparative advantage?

Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. What are each country's opportunity costs of producing iPods?

Trade increases productivity when production is carried out by the person/group with the comparative advantage.

Use the following to answer questions: Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles) Refer to the figure. What is the maximum amount of textiles China can produce?

According to the theory of comparative advantage, a country specializes in producing goods with lower opportunity costs than in another country.

The Dark Ages was a period in which trade:

The basic idea of trade is to buy the things you could only make at a high opportunity cost, and sell the things you can make at a low opportunity cost.

Wage rates are primarily based on the:

The Big Ideas

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

Figure: Benin In the figure, Benin has 32 workers, and the price per ton of cotton and ton of rice is $2,500 and $1,200, respectively. The average wage with no trade is , and the average wage with trade is __.