Question 1

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

Accepted Answer

A) the gains from trade. 
B) absolute advantage. 
C) comparative advantage. 
D) specialization. 
A) the gains from trade. 
B) absolute advantage. 
C) comparative advantage. 
D) specialization.

Question 2

The production possibilities frontier:

Accepted Answer

A) can show all possible combinations of goods,but not tell us which society should choose. 
B) can show all possible combinations of goods,and which society should choose. 
C) cannot show all possible combinations of goods because society is typically inefficient. 
D) can show us which possible combinations of goods society should choose,but cannot tell us which points will be inefficient. 
A) can show all possible combinations of goods,but not tell us which society should choose. 
B) can show all possible combinations of goods,and which society should choose. 
C) cannot show all possible combinations of goods because society is typically inefficient. 
D) can show us which possible combinations of goods society should choose,but cannot tell us which points will be inefficient.

Question 3

Suppose an American worker can make 100 chairs or catch 1000 fish per day.A Chilean worker,on the other hand,can produce 40 chairs or catch 400 fish per day.The United States possesses a(n)_______________ advantage in chair production,but not a(n)______________ advantage in fish production.

Accepted Answer

A) absolute;comparative 
B) comparative;absolute 
C) absolute;absolute 
D) comparative;comparative 
A) absolute;comparative 
B) comparative;absolute 
C) absolute;absolute 
D) comparative;comparative

Question 4

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Canada has the ____________ opportunity cost of a pair of shoes than the United States,so: ____________.

Accepted Answer

A) higher;Canada should specialize in shoe production 
B) lower;Canada should specialize in apple production 
C) higher;Canada should specialize in apple production 
D) lower;Canada should specialize in shoe production 
A) higher;Canada should specialize in shoe production 
B) lower;Canada should specialize in apple production 
C) higher;Canada should specialize in apple production 
D) lower;Canada should specialize in shoe production

Question 5

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Which of the following is true?

Accepted Answer

A) Country B should produce tablets and Country A should produce iPods,and they could benefit from trade. 
B) Country B should produce iPods and Country A should produce tablets,and they could benefit from trade. 
C) Neither country can benefit from trade since no comparative advantage exists. 
D) Because Country B has the absolute advantage tablets,they should specialize in the production of tablets. 
A) Country B should produce tablets and Country A should produce iPods,and they could benefit from trade. 
B) Country B should produce iPods and Country A should produce tablets,and they could benefit from trade. 
C) Neither country can benefit from trade since no comparative advantage exists. 
D) Because Country B has the absolute advantage tablets,they should specialize in the production of tablets.

Question 6

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B has the comparative advantage in the production of:

Accepted Answer

A) iPods only. 
B) tablets only. 
C) both iPods and tablets. 
D) neither iPods or tablets. 
A) iPods only. 
B) tablets only. 
C) both iPods and tablets. 
D) neither iPods or tablets.

Question 7

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.Two possible consumption bundles that Country A could produce are:

Accepted Answer

A) (5,000 bananas,1,000 tomatoes)and (1,000 bananas,5,000 tomatoes) 
B) (5,000 bananas,0 tomatoes)and (2,500 bananas,500 tomatoes) 
C) (2,500 bananas,500 tomatoes)and (1,250 bananas,800 tomatoes) 
D) (2,500 bananas,750 tomatoes)and (1,250 bananas,750 tomatoes) 
A) (5,000 bananas,1,000 tomatoes)and (1,000 bananas,5,000 tomatoes) 
B) (5,000 bananas,0 tomatoes)and (2,500 bananas,500 tomatoes) 
C) (2,500 bananas,500 tomatoes)and (1,250 bananas,800 tomatoes) 
D) (2,500 bananas,750 tomatoes)and (1,250 bananas,750 tomatoes)

Question 8

The concepts of specialization and gains from trade explain:

Accepted Answer

A) international trade. 
B) why globalization has expanded recently. 
C) consumer decisions. 
D) both international trade and the choices individuals make. 
A) international trade. 
B) why globalization has expanded recently. 
C) consumer decisions. 
D) both international trade and the choices individuals make.

Question 9

When a country loses its comparative advantage in the production of a good:

Accepted Answer

A) it should stop trading and become self-sufficient. 
B) it will gain the comparative advantage in the production of another good. 
C) it will become a loser in trade in the long run. 
D) it will still have the absolute advantage in the production of the good. 
A) it should stop trading and become self-sufficient. 
B) it will gain the comparative advantage in the production of another good. 
C) it will become a loser in trade in the long run. 
D) it will still have the absolute advantage in the production of the good.

Question 10

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country A would be working efficiently if they were producing:

Accepted Answer

A) (500 iPods,100 tablets). 
B) (500 iPods,150 tablets). 
C) (500 iPods,200 tablets). 
D) (500 iPods,250 tablets). 
A) (500 iPods,100 tablets). 
B) (500 iPods,150 tablets). 
C) (500 iPods,200 tablets). 
D) (500 iPods,250 tablets).

Question 11

If a wealthy nation like the United States trades with a poorer,less developed nation like Cambodia,then it is likely true that:

Accepted Answer

A) the United States is taking advantage of Cambodia and is the only beneficiary to the trade. 
B) Cambodia is pressured to enter trade and not benefiting at all. 
C) both the United States and Cambodia can benefit from trading. 
D) the United States is being charitable and not benefiting from the trade at all. 
A) the United States is taking advantage of Cambodia and is the only beneficiary to the trade. 
B) Cambodia is pressured to enter trade and not benefiting at all. 
C) both the United States and Cambodia can benefit from trading. 
D) the United States is being charitable and not benefiting from the trade at all.

Question 12

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country A could potentially make would be:

Accepted Answer

A) (1,000 iPods,500 tablets). 
B) (500 iPods,500 tablets). 
C) (500 iPods,250 tablets). 
D) (750 iPods,150 tablets). 
A) (1,000 iPods,500 tablets). 
B) (500 iPods,500 tablets). 
C) (500 iPods,250 tablets). 
D) (750 iPods,150 tablets).

Question 13

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Suppose Country B's population of workers increased to 600.Now we can say:

Accepted Answer

A) Country B now possesses the absolute advantage in the production of both goods. 
B) Country B now possesses the absolute advantage in tablets only. 
C) Country B now has the comparative advantage in iPod production. 
D) Country B has no need to trade now. 
A) Country B now possesses the absolute advantage in the production of both goods. 
B) Country B now possesses the absolute advantage in tablets only. 
C) Country B now has the comparative advantage in iPod production. 
D) Country B has no need to trade now.

Question 14

Suppose that a worker in Econia can make either 10 iPods or 5 tablets each year.Econia has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Accepted Answer

A) (400 iPods,2,000 tablets). 
B) (200 iPods,1,500 tablets). 
C) (300 iPods,450 tablets). 
D) (400 iPods,1 tablet). 
A) (400 iPods,2,000 tablets). 
B) (200 iPods,1,500 tablets). 
C) (300 iPods,450 tablets). 
D) (400 iPods,1 tablet).

Question 15

Suppose that,given the same number of workers,the United States can produce five times as many computers or 10 times as many airplanes as Mexico.Which of the following statements is true?

Accepted Answer

A) The United States has an absolute advantage in the production of computers,and Mexico has an absolute advantage in the production of airplanes. 
B) The United States has an absolute advantage in the production of airplanes,and Mexico has an absolute advantage in the production of computers. 
C) The United States has an absolute advantage in the production of both airplanes and computers. 
D) Mexico has an absolute advantage in the production of both airplanes and computers. 
A) The United States has an absolute advantage in the production of computers,and Mexico has an absolute advantage in the production of airplanes. 
B) The United States has an absolute advantage in the production of airplanes,and Mexico has an absolute advantage in the production of computers. 
C) The United States has an absolute advantage in the production of both airplanes and computers. 
D) Mexico has an absolute advantage in the production of both airplanes and computers.

Question 16

The concepts of comparative advantage,specialization,and trade:

Accepted Answer

A) can be useful in explaining why countries import and export certain goods. 
B) can be useful in explaining why individuals typically work at one job,and buy the other goods and services they need. 
C) can be useful in explaining why we allow ourselves to be interdependent on others. 
D) All of the statements are true. 
A) can be useful in explaining why countries import and export certain goods. 
B) can be useful in explaining why individuals typically work at one job,and buy the other goods and services they need. 
C) can be useful in explaining why we allow ourselves to be interdependent on others. 
D) All of the statements are true.

Question 17

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.The opportunity cost of one pair of shoes for the United States is _______,while the opportunity cost of one pair of shoes for Canada is _________.

Accepted Answer

A) 5 apples;2 apples 
B) 1/5 apple;½ apple 
C) 2,000 apples;200 apples 
D) 100 apples;20 apples 
A) 5 apples;2 apples 
B) 1/5 apple;½ apple 
C) 2,000 apples;200 apples 
D) 100 apples;20 apples

Question 18

Tom and Jerry have two tasks to do all day: set traps and build bombs.If Tom spends all day setting traps,he will have set 16 traps.If he instead devotes his day to building bombs,Tom will build 4 bombs.If Jerry spends his day setting traps,he will set 14 traps;if he spends the day building bombs,he will build 7 bombs.At the end of the day,if Jerry was efficient with his resources,he could have produced:

Accepted Answer

A) 12 traps and 0 bombs. 
B) 10 traps and 2 bombs. 
C) 8 traps and 2 bombs. 
D) 6 traps and 2 bombs. 
A) 12 traps and 0 bombs. 
B) 10 traps and 2 bombs. 
C) 8 traps and 2 bombs. 
D) 6 traps and 2 bombs.

Question 19

If France is capable of producing either cheese or wine or some combination of those two products,then:

Accepted Answer

A) France should produce the one it is more efficient at producing. 
B) France should produce the one for which it has a lower opportunity cost. 
C) France should produce the one for which is has a higher opportunity cost. 
D) France should remain self-sufficient if it has the absolute advantage in the production of both. 
A) France should produce the one it is more efficient at producing. 
B) France should produce the one for which it has a lower opportunity cost. 
C) France should produce the one for which is has a higher opportunity cost. 
D) France should remain self-sufficient if it has the absolute advantage in the production of both.

Question 20

A more realistic production possibilities curve:

Accepted Answer

A) is more convex than one assuming constant opportunity costs. 
B) is more convex than one assuming increasing opportunity costs. 
C) is more concave than one assuming constant opportunity costs. 
D) is straighter than one assuming constant opportunity costs. 
A) is more convex than one assuming constant opportunity costs. 
B) is more convex than one assuming increasing opportunity costs. 
C) is more concave than one assuming constant opportunity costs. 
D) is straighter than one assuming constant opportunity costs.

Exam 2: Specialization and Exchange

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

The production possibilities frontier:

Suppose an American worker can make 100 chairs or catch 1000 fish per day.A Chilean worker,on the other hand,can produce 40 chairs or catch 400 fish per day.The United States possesses a(n)_______________ advantage in chair production,but not a(n)______________ advantage in fish production.

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Canada has the ____________ opportunity cost of a pair of shoes than the United States,so: ____________.

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Which of the following is true?

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B has the comparative advantage in the production of:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.Two possible consumption bundles that Country A could produce are:

The concepts of specialization and gains from trade explain:

When a country loses its comparative advantage in the production of a good:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country A would be working efficiently if they were producing:

If a wealthy nation like the United States trades with a poorer,less developed nation like Cambodia,then it is likely true that:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country A could potentially make would be:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Suppose Country B's population of workers increased to 600.Now we can say:

Suppose that a worker in Econia can make either 10 iPods or 5 tablets each year.Econia has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Suppose that,given the same number of workers,the United States can produce five times as many computers or 10 times as many airplanes as Mexico.Which of the following statements is true?

The concepts of comparative advantage,specialization,and trade:

If France is capable of producing either cheese or wine or some combination of those two products,then:

A more realistic production possibilities curve:

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Suppose an American worker can make 100 chairs or catch 1000 fish per day.A Chilean worker,on the other hand,can produce 40 chairs or catch 400 fish per day.The United States possesses a(n)_ advantage in chair production,but not a(n) advantage in fish production.

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Canada has the opportunity cost of a pair of shoes than the United States,so: .