Question 1

A country possesses a comparative advantage in the production of a product if

Accepted Answer

A) the opportunity cost, in terms of the amount of other products that it gives up to produce this product, is lower than it is for its trading partners. 
B) it possesses an absolute advantage in the production of this good compared to its trading partners. 
C) it is able to produce less of this good per worker than its trading partners. 
D) it can produce more of this good per hour than its trading partners. 
A) the opportunity cost, in terms of the amount of other products that it gives up to produce this product, is lower than it is for its trading partners. 
B) it possesses an absolute advantage in the production of this good compared to its trading partners. 
C) it is able to produce less of this good per worker than its trading partners. 
D) it can produce more of this good per hour than its trading partners.

Question 2

Suppose that Canada can produce 15 units of timber or 3 units of grain.Suppose that Mexico can produce 6 units of timber or 2 units of grain.Which of the following is CORRECT?

Accepted Answer

A) Mexico has a comparative advantage in grain production. 
B) Mexico has an absolute advantage in timber production. 
C) Canada has a comparative advantage in grain production. 
D) The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber. 
A) Mexico has a comparative advantage in grain production. 
B) Mexico has an absolute advantage in timber production. 
C) Canada has a comparative advantage in grain production. 
D) The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.

Question 3

Comparative advantage can change over time.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Why did Adam Smith criticize the trade barriers imposed by the mercantilists?

Accepted Answer

Smith was highly critical of trade barri

Question 6

The economic philosophy that favors strict limits on imports and strong support for exports is called

Accepted Answer

A) zero sum. 
B) mercantilism. 
C) comparative advantage. 
D) absolute advantage. 
A) zero sum. 
B) mercantilism. 
C) comparative advantage. 
D) absolute advantage.

Question 7

What results has the Republic of Korea experienced from its change in policies?

Accepted Answer

It has successfully industrial

Question 8

Table 3.1
Output per Hour Worked
  
-Based on Table 3.1,the opportunity cost of a pair of shoes in the United States is

Accepted Answer

A) three computers. 
B) two computers. 
C) one computer. 
D) one-half computer. 
A) three computers. 
B) two computers. 
C) one computer. 
D) one-half computer.

Question 9

A country that creates competitive advantage where there are not comparative advantages misallocates its resources and has lower national well-being.

Accepted Answer

A) True 
 B)False

Question 10

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. 
A) three pairs of shoes. 
B) one pair of shoes. 
C) one-half pair of shoes. 
D) one-third pair of shoes.

Question 11

If a country has lower overall productivity levels than its trading partners,then it will

Accepted Answer

A) be unable to export. 
B) have a trade deficit. 
C) not be able to obtain gains from trade. 
D) have a lower standard of living than its trading partners. 
A) be unable to export. 
B) have a trade deficit. 
C) not be able to obtain gains from trade. 
D) have a lower standard of living than its trading partners.

Question 12

If two countries agree to specialize and trade based on comparative advantage,which of the following is most likely to be true?

Accepted Answer

A) Both of the countries will consume outside their respective production possibilities curves. 
B) One of the countries will end up receiving all of the gains from trade. 
C) One of the countries will both consume and produce on its production possibilities curve. 
D) Only one of the countries will produce on and consume outside its production possibilities curve. 
A) Both of the countries will consume outside their respective production possibilities curves. 
B) One of the countries will end up receiving all of the gains from trade. 
C) One of the countries will both consume and produce on its production possibilities curve. 
D) Only one of the countries will produce on and consume outside its production possibilities curve.

Question 13

Explain how a country with no absolute advantage can gain from trade.

Accepted Answer

Even if a country cannot produce absolut

Question 14

Describe some of the key controversies regarding global cotton trade between high cost and low cost cotton producers.

Accepted Answer

Low cost cotton producers produce less c

Question 15

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. 
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.

Question 16

In the simple trade model,what is assumed about labor?

Accepted Answer

It is perfectly mobi

Question 17

For a country in autarky,the opportunity cost of the good on the horizontal axis is the same as

Accepted Answer

A) the relative price of the good on the vertical axis. 
B) the relative price of the good on the horizontal axis. 
C) the opportunity cost of the good on the vertical axis. 
D) the nominal price of the good on the horizontal axis. 
A) the relative price of the good on the vertical axis. 
B) the relative price of the good on the horizontal axis. 
C) the opportunity cost of the good on the vertical axis. 
D) the nominal price of the good on the horizontal axis.

Question 18

What type of policies did Adam Smith attack in his book,An Inquiry into the Nature and Causes of the Wealth of Nations?

Accepted Answer

The answer of What type of policies did Adam Smith...

Question 19

Assume that both the United States and Germany produce beef and computers.The U.S.can produce 200 computers or 1,000 pounds of beef per day.Germany can produce 500 computers or 250 pounds of beef per day.
What is the opportunity cost of beef and computer chips in each country? In which good does each country have a comparative advantage? What is the range for mutually beneficial trade in computers?

Accepted Answer

In the U.S.,the opportunity cost of comp

Question 20

Suppose that Paraguay can produce 12 wheat or 3 corn and Bolivia can produce 4 wheat or 2 corn.Suppose that opportunity costs are constant.Which of the following is a potentially agreeable trade arrangement for Paraguay and Bolivia?

Accepted Answer

A) Paraguay trades one corn to Bolivia for three units of wheat. 
B) Bolivia trades one corn to Paraguay for three units of wheat. 
C) Bolivia trades one corn to Paraguay for one wheat. 
D) Paraguay trades one wheat to Bolivia for two corn. 
A) Paraguay trades one corn to Bolivia for three units of wheat. 
B) Bolivia trades one corn to Paraguay for three units of wheat. 
C) Bolivia trades one corn to Paraguay for one wheat. 
D) Paraguay trades one wheat to Bolivia for two corn.

A country possesses a comparative advantage in the production of a product if

Suppose that Canada can produce 15 units of timber or 3 units of grain.Suppose that Mexico can produce 6 units of timber or 2 units of grain.Which of the following is CORRECT?

Comparative advantage can change over time.

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?

Why did Adam Smith criticize the trade barriers imposed by the mercantilists?

The economic philosophy that favors strict limits on imports and strong support for exports is called

What results has the Republic of Korea experienced from its change in policies?

Table 3.1 Output per Hour Worked -Based on Table 3.1,the opportunity cost of a pair of shoes in the United States is

A country that creates competitive advantage where there are not comparative advantages misallocates its resources and has lower national well-being.

Based on Table 3.1,the pre-trade relative price of a computer in Mexico is

If a country has lower overall productivity levels than its trading partners,then it will

If two countries agree to specialize and trade based on comparative advantage,which of the following is most likely to be true?

Explain how a country with no absolute advantage can gain from trade.

Describe some of the key controversies regarding global cotton trade between high cost and low cost cotton producers.

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

In the simple trade model,what is assumed about labor?

For a country in autarky,the opportunity cost of the good on the horizontal axis is the same as

What type of policies did Adam Smith attack in his book,An Inquiry into the Nature and Causes of the Wealth of Nations?

Suppose that Paraguay can produce 12 wheat or 3 corn and Bolivia can produce 4 wheat or 2 corn.Suppose that opportunity costs are constant.Which of the following is a potentially agreeable trade arrangement for Paraguay and Bolivia?

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

China and India in the World Economy

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Exam 3: Comparative Advantage and the Gains From Trade

A country possesses a comparative advantage in the production of a product if

Suppose that Canada can produce 15 units of timber or 3 units of grain.Suppose that Mexico can produce 6 units of timber or 2 units of grain.Which of the following is CORRECT?

Comparative advantage can change over time.

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?

Why did Adam Smith criticize the trade barriers imposed by the mercantilists?

The economic philosophy that favors strict limits on imports and strong support for exports is called

What results has the Republic of Korea experienced from its change in policies?

Table 3.1 Output per Hour Worked -Based on Table 3.1,the opportunity cost of a pair of shoes in the United States is

A country that creates competitive advantage where there are not comparative advantages misallocates its resources and has lower national well-being.

Based on Table 3.1,the pre-trade relative price of a computer in Mexico is

If a country has lower overall productivity levels than its trading partners,then it will

If two countries agree to specialize and trade based on comparative advantage,which of the following is most likely to be true?

Explain how a country with no absolute advantage can gain from trade.

Describe some of the key controversies regarding global cotton trade between high cost and low cost cotton producers.

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

In the simple trade model,what is assumed about labor?

For a country in autarky,the opportunity cost of the good on the horizontal axis is the same as

What type of policies did Adam Smith attack in his book,An Inquiry into the Nature and Causes of the Wealth of Nations?

Suppose that Paraguay can produce 12 wheat or 3 corn and Bolivia can produce 4 wheat or 2 corn.Suppose that opportunity costs are constant.Which of the following is a potentially agreeable trade arrangement for Paraguay and Bolivia?

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

China and India in the World Economy

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