Question 1

The basis for free trade is the concept of

Accepted Answer

A) absolute advantage. 
B) differences in natural resources and climate. 
C) differences in nominal wages. 
D) comparative advantage. 
A) absolute advantage. 
B) differences in natural resources and climate. 
C) differences in nominal wages. 
D) comparative advantage.

Question 2

What is productivity?

Accepted Answer

The amount

Question 3

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

Accepted Answer

A) True 
 B)False

Question 4

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

Accepted Answer

The gains from trade do not rely on over

Question 5

A country is likely to be better off in the long run if it pursues self sufficiency.

Accepted Answer

A) True 
 B)False

Question 6

Given that Sandy can produce 10 economics reports or 2 sales calls and Tim can produce 2 economics reports or 1 sales call,which of the following is FALSE?

Accepted Answer

A) Sandy has a comparative advantage in sales calls. 
B) Tim has a comparative advantage in sales calls. 
C) Sandy has a comparative advantage in economics reports. 
D) Sandy has an absolute advantage in both economics reports and sales calls. 
A) Sandy has a comparative advantage in sales calls. 
B) Tim has a comparative advantage in sales calls. 
C) Sandy has a comparative advantage in economics reports. 
D) Sandy has an absolute advantage in both economics reports and sales calls.

Question 7

Comparative advantage can change over time.

Accepted Answer

A) True 
 B)False

Question 8

Table 3.1
Use the data in the table below to answer the following question(s):
Output per Hour Worked
  
-Based on Table 3.1,if the world price of computers is four pairs of shoes,then the optimal strategy for each country would be

Accepted Answer

A) to specialize in shoes. 
B) to specialize in computers. 
C) for Mexico to specialize in shoes,and the United States in computers. 
D) for the United States to specialize in shoes,and Mexico in computers. 
E) None of the above. 
A) to specialize in shoes. 
B) to specialize in computers. 
C) for Mexico to specialize in shoes,and the United States in computers. 
D) for the United States to specialize in shoes,and Mexico in computers. 
E) None of the above.

Question 9

If one nation is able to produce a good at a lower opportunity cost than another,it has

Accepted Answer

A) an absolute advantage in that good. 
B) a comparative advantage in that good. 
C) a productivity advantage in that good. 
D) a technological advantage in that good. 
E) no reason to want to trade that good. 
A) an absolute advantage in that good. 
B) a comparative advantage in that good. 
C) a productivity advantage in that good. 
D) a technological advantage in that good. 
E) no reason to want to trade that good.

Question 10

Suppose that Canada can produce 15 timber or 3 film and Mexico can produce 9 timber or 3 film.Suppose that opportunity costs are constant.Which of the following is FALSE?

Accepted Answer

A) Canada has an absolute advantage in timber production. 
B) Mexico has a comparative advantage in film production. 
C) The opportunity costs for producing timber are lower in Canada than in Mexico. 
D) Canada and Mexico would find trade mutually advantageous at a ratio of one unit of film to six units of timber. 
A) Canada has an absolute advantage in timber production. 
B) Mexico has a comparative advantage in film production. 
C) The opportunity costs for producing timber are lower in Canada than in Mexico. 
D) Canada and Mexico would find trade mutually advantageous at a ratio of one unit of film to six units of timber.

Question 11

All of the following are true EXCEPT

Accepted Answer

A) trade between two nations reduces their opportunity costs. 
B) trade makes nations dependent on each other. 
C) trade between nations will not benefit all citizens. 
D) the principle of comparative advantage does not apply to countries with extremely limited resources. 
E) specialization according to comparative advantage can make both countries better off. 
A) trade between two nations reduces their opportunity costs. 
B) trade makes nations dependent on each other. 
C) trade between nations will not benefit all citizens. 
D) the principle of comparative advantage does not apply to countries with extremely limited resources. 
E) specialization according to comparative advantage can make both countries better off.

Question 12

Table 3.1
Use the data in the table below to answer the following question(s):
Output per Hour Worked
  
-Based on Table 3.1,the pre-trade relative price of a computer in Mexico is

Accepted Answer

A) three pairs of shoes. 
B) one pair of shoes. 
C) one-half pair of shoes. 
D) one-third pair of shoes. 
E) None of the above. 
A) three pairs of shoes. 
B) one pair of shoes. 
C) one-half pair of shoes. 
D) one-third pair of shoes. 
E) None of the above.

Question 13

Certain kinds of tropical fruits are impossible to grow outdoors in the United States.Suppose,however,that in order to create jobs in Wyoming,the U.S.government offered extensive subsidies to firms to produce bananas.With the subsidies,firms could build greenhouses and offer the fruit at world prices.

Accepted Answer

A) The United States now has a comparative advantage in bananas. 
B) The United States has a comparative advantage,but is not competitive. 
C) The United States is competitive,but does not have a comparative advantage. 
D) The United States has a comparative advantage and is competitive. 
E) None of the above. 
A) The United States now has a comparative advantage in bananas. 
B) The United States has a comparative advantage,but is not competitive. 
C) The United States is competitive,but does not have a comparative advantage. 
D) The United States has a comparative advantage and is competitive. 
E) None of the above.

Question 14

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

Accepted Answer

A) opportunity cost of production is less in Japan. 
B) absolute cost of production is less in the United States. 
C) absolute cost of production is less in Japan. 
D) opportunity cost of production is less in the United States. 
E) None of the above. 
A) opportunity cost of production is less in Japan. 
B) absolute cost of production is less in the United States. 
C) absolute cost of production is less in Japan. 
D) opportunity cost of production is less in the United States. 
E) None of the above.

The basis for free trade is the concept of

What is productivity?

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

A country is likely to be better off in the long run if it pursues self sufficiency.

Given that Sandy can produce 10 economics reports or 2 sales calls and Tim can produce 2 economics reports or 1 sales call,which of the following is FALSE?

Comparative advantage can change over time.

Table 3.1 Use the data in the table below to answer the following question(s): Output per Hour Worked -Based on Table 3.1,if the world price of computers is four pairs of shoes,then the optimal strategy for each country would be

If one nation is able to produce a good at a lower opportunity cost than another,it has

Suppose that Canada can produce 15 timber or 3 film and Mexico can produce 9 timber or 3 film.Suppose that opportunity costs are constant.Which of the following is FALSE?

All of the following are true EXCEPT

Table 3.1 Use the data in the table below to answer the following question(s): Output per Hour Worked -Based on Table 3.1,the pre-trade relative price of a computer in Mexico is

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

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Exam 3: Comparative Advantage and the Gains From Trade

The basis for free trade is the concept of

What is productivity?

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

A country is likely to be better off in the long run if it pursues self sufficiency.

Given that Sandy can produce 10 economics reports or 2 sales calls and Tim can produce 2 economics reports or 1 sales call,which of the following is FALSE?

Comparative advantage can change over time.

Table 3.1 Use the data in the table below to answer the following question(s): Output per Hour Worked -Based on Table 3.1,if the world price of computers is four pairs of shoes,then the optimal strategy for each country would be

If one nation is able to produce a good at a lower opportunity cost than another,it has

Suppose that Canada can produce 15 timber or 3 film and Mexico can produce 9 timber or 3 film.Suppose that opportunity costs are constant.Which of the following is FALSE?

All of the following are true EXCEPT

Table 3.1 Use the data in the table below to answer the following question(s): Output per Hour Worked -Based on Table 3.1,the pre-trade relative price of a computer in Mexico is

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters