Question 1

Table 3-6
  
-Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Accepted Answer

A) 4 breads. 
B) 2 breads. 
C) 1/2 bread. 
D) 1/4 bread. 
A) 4 breads. 
B) 2 breads. 
C) 1/2 bread. 
D) 1/4 bread.

Question 2

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good for which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, what is each country's maximum consumption of new radios and televisions per year?

Accepted Answer

A) 300 televisions and 100 radios in Radioland and 300 radios and 100 televisions in Teeveeland. 
B) 300 televisions and 100 radios in Teeveeland and 300 radios and 100 televisions in Radioland. 
C) 100 televisions and 200 radios in Radioland and 100 radios and 200 televisions in Teeveeland. 
D) 400 televisions and 100 radios in Teeveeland and 400 radios and 100 televisions in Radioland. 
A) 300 televisions and 100 radios in Radioland and 300 radios and 100 televisions in Teeveeland. 
B) 300 televisions and 100 radios in Teeveeland and 300 radios and 100 televisions in Radioland. 
C) 100 televisions and 200 radios in Radioland and 100 radios and 200 televisions in Teeveeland. 
D) 400 televisions and 100 radios in Teeveeland and 400 radios and 100 televisions in Radioland.

Question 3

Figure 3-4    
-Refer to Figure 3-4. Which of the following is correct?

Accepted Answer

A) Ben has a comparative advantage in beer, and Jerry has a comparative advantage in wine. 
B) Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer. 
C) Ben has a comparative advantage in neither good, and Jerry has a comparative advantage in wine. 
D) Ben has a comparative advantage in both goods, and Jerry has a comparative advantage in neither. 
A) Ben has a comparative advantage in beer, and Jerry has a comparative advantage in wine. 
B) Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer. 
C) Ben has a comparative advantage in neither good, and Jerry has a comparative advantage in wine. 
D) Ben has a comparative advantage in both goods, and Jerry has a comparative advantage in neither.

Question 4

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

Accepted Answer

A) Greece will specialize in and export fish. 
B) Some individuals in each country will be hurt. 
C) More of each good can be consumed in both countries. 
D) Greece will benefit from trade more than Germany. 
A) Greece will specialize in and export fish. 
B) Some individuals in each country will be hurt. 
C) More of each good can be consumed in both countries. 
D) Greece will benefit from trade more than Germany.

Question 5

On what is comparative advantage based?

Accepted Answer

A) capital costs. 
B) labour costs. 
C) dollar price. 
D) opportunity costs. 
A) capital costs. 
B) labour costs. 
C) dollar price. 
D) opportunity costs.

Question 6

Table 3-5
  
-Refer to Table 3-5. Which of the following is correct?

Accepted Answer

A) Canada has an absolute advantage in airplanes and Japan has an absolute advantage in cars. 
B) Canada has an absolute advantage in neither good and Japan has an absolute advantage in both goods. 
C) Canada has an absolute advantage in cars and Japan has an absolute advantage in airplanes. 
D) Canada has an absolute advantage in neither good and Japan has an absolute advantage in cars. 
A) Canada has an absolute advantage in airplanes and Japan has an absolute advantage in cars. 
B) Canada has an absolute advantage in neither good and Japan has an absolute advantage in both goods. 
C) Canada has an absolute advantage in cars and Japan has an absolute advantage in airplanes. 
D) Canada has an absolute advantage in neither good and Japan has an absolute advantage in cars.

Question 7

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Accepted Answer

A) Each person's production possibilities frontier will shift outward. 
B) Total production in the economy will increase. 
C) Everyone can be better off with specialization and trade. 
D) The size of the economic pie will increase. 
A) Each person's production possibilities frontier will shift outward. 
B) Total production in the economy will increase. 
C) Everyone can be better off with specialization and trade. 
D) The size of the economic pie will increase.

Question 8

Suppose it takes a Chinese worker 2 hours to produce a ceramic pot, and 20 hours to produce a tablecloth. Suppose that it takes a Canadian worker 2 hours to produce a ceramic pot and 10 hours to produce a tablecloth. It will pay China to produce extra pots and export them to Canada in return for imported Canadian tablecloths.

Accepted Answer

A) True 
 B)False

Question 9

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Accepted Answer

Absolute advantage refers to productivit

Question 10

Which of the following is correct regarding David Ricardo?

Accepted Answer

A) He wrote books opposing the ideas of Adam Smith. 
B) He was the founder of modern economics. 
C) He argued in favour of Britain following a free-trade policy. 
D) He wrote An Inquiry into the Nature and Causes of the Wealth of Nations. 
A) He wrote books opposing the ideas of Adam Smith. 
B) He was the founder of modern economics. 
C) He argued in favour of Britain following a free-trade policy. 
D) He wrote An Inquiry into the Nature and Causes of the Wealth of Nations.

Question 11

Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Accepted Answer

A) 1/5 table for Mike and 1/3 table for Sandy. 
B) 5 tables for Mike and 3 tables for Sandy. 
C) 1/3 table for Mike and 1/5 table for Sandy. 
D) 3 tables for Mike and 5 tables for Sandy. 
A) 1/5 table for Mike and 1/3 table for Sandy. 
B) 5 tables for Mike and 3 tables for Sandy. 
C) 1/3 table for Mike and 1/5 table for Sandy. 
D) 3 tables for Mike and 5 tables for Sandy.

Question 12

Which book did David Ricardo write?

Accepted Answer

A) Inquiry into the Nature and Causes of the Wealth of Nations. 
B) Principles of Political Economy and Taxation. 
C) The General Theory of Prices and Employment. 
D) Why Nations Trade. 
A) Inquiry into the Nature and Causes of the Wealth of Nations. 
B) Principles of Political Economy and Taxation. 
C) The General Theory of Prices and Employment. 
D) Why Nations Trade.

Question 13

Table 3-5
  
-Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Accepted Answer

A) 4 cars. 
B) 3 cars. 
C) 1/3 car. 
D) 1/4 car. 
A) 4 cars. 
B) 3 cars. 
C) 1/3 car. 
D) 1/4 car.

Question 14

Table 3-6
  
-Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Accepted Answer

A) 2 breads. 
B) 1 bread. 
C) 1/2 bread. 
D) 1/4 bread. 
A) 2 breads. 
B) 1 bread. 
C) 1/2 bread. 
D) 1/4 bread.

Question 15

Table 3-5
  
-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

Accepted Answer

A) Canada will export cars and Japan will export airplanes. 
B) Canada will export airplanes and Japan will export cars. 
C) Canada will export cars and Japan will export cars. 
D) Canada will export airplanes and Japan will export airplanes. 
A) Canada will export cars and Japan will export airplanes. 
B) Canada will export airplanes and Japan will export cars. 
C) Canada will export cars and Japan will export cars. 
D) Canada will export airplanes and Japan will export airplanes.

Question 16

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Accepted Answer

A) True 
 B)False

Question 17

Table 3-2
  
-Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Accepted Answer

A) 4 hours of labour. 
B) 5 hours of labour. 
C) 5/4 kilograms of potatoes. 
D) 4/5 kilogram of potatoes. 
A) 4 hours of labour. 
B) 5 hours of labour. 
C) 5/4 kilograms of potatoes. 
D) 4/5 kilogram of potatoes.

Question 18

Some countries win in international trade, while other countries lose.

Accepted Answer

A) True 
 B)False

Question 19

Table 3-3
  
-Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Accepted Answer

A) 5 quilts. 
B) 1 quilt. 
C) 1/5 quilt. 
D) 4 quilts. 
A) 5 quilts. 
B) 1 quilt. 
C) 1/5 quilt. 
D) 4 quilts.

Question 20

Table 3-5
  
-Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Accepted Answer

A) 4 airplanes. 
B) 3 airplanes. 
C) 1/3 airplane. 
D) 1/4 airplane. 
A) 4 airplanes. 
B) 3 airplanes. 
C) 1/3 airplane. 
D) 1/4 airplane.

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Figure 3-4 -Refer to Figure 3-4. Which of the following is correct?

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

On what is comparative advantage based?

Table 3-5 -Refer to Table 3-5. Which of the following is correct?

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Which of the following is correct regarding David Ricardo?

Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Which book did David Ricardo write?

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Table 3-5 -Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Table 3-2 -Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Some countries win in international trade, while other countries lose.

Table 3-3 -Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 3: Interdependence and the Gains From Trade

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Figure 3-4 -Refer to Figure 3-4. Which of the following is correct?

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

On what is comparative advantage based?

Table 3-5 -Refer to Table 3-5. Which of the following is correct?

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Which of the following is correct regarding David Ricardo?

Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Which book did David Ricardo write?

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Table 3-5 -Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Table 3-2 -Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Some countries win in international trade, while other countries lose.

Table 3-3 -Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters