Deck 8: Gains From Trade

Question 1

The term "gains from trade" means the

A)total surplus in a market.
B)higher prices that firms get when they sell abroad rather than in home markets.
C)benefits that come from reallocating resources, goods, and services to better uses.
D)alliances that nations make with each other when trade occurs between them.

Answer 1

C

Question 2

The benefits that come from reallocating resources, goods, and services to better uses when trade occurs are called

A)interactive benefits.
B)the gains from trade.
C)comparative gains.
D)absolute advantages.

Answer 2

B

Question 3

Markets allocate

A)resources, goods, and services.
B)money and services but not goods and resources.
C)money and resources but not goods and services.
D)resources and goods but not services.

Answer 3

A

Question 4

Which of the following is NOT an example of the allocating function of markets?

A)When the price of tomatoes rises, Jose buys fewer tomatoes.
B)Sunil gets a job to save for a car.
C)Nina knits a sweater and gives it to her niece.
D)Penina buys gas at the station with the lowest price.

Question 5

What is the function of the markets?

A)Markets create demand to earn profits.
B)Markets sell goods to make use of inputs.
C)Markets produce output to cover costs.
D)Markets reallocate resources, goods, and services to better uses.

Question 6

The main role of markets is:

A)facilitating consumption.
B)preventing waste in choices.
C)reallocating resources to better uses.
D)providing jobs and products.

Question 7

When you assign tasks to employees based on comparative advantage, task assignments go to those with the

A)highest wage.
B)lowest wage.
C)highest opportunity cost.
D)lowest opportunity cost.

Question 8

You have an absolute advantage in producing a product if you:

A)can produce the product using the fewest inputs.
B)can produce the product at the lowest opportunity cost.
C)have training in producing it.
D)have the most capital to work with.

Question 9

The person who can produce a product using the fewest inputs has _____ in that product.

A)a comparative advantage
B)an absolute advantage
C)market power
D)maximum profit

Question 10

The person who has an absolute advantage in a task

A)can perform the task at a lower opportunity cost than anyone else.
B)is the person who should do the task.
C)can perform the task at a higher opportunity cost than anyone else.
D)is the one who is best at the task.

Question 11

Ang can mow the lawn in two hours. Bill takes three hours to mow the same lawn. What can you conclude from this information?

A)Ang has a comparative advantage over Bill in mowing the lawn.
B)Bill has a comparative advantage over Ang in mowing the lawn.
C)Ang has an absolute advantage over Bill in mowing the lawn.
D)Bill has an absolute advantage over Ang in mowing the lawn.

Question 12

Chanda can change the oil in a particular car in 30 minutes. It takes 45 minutes for Deepa to change the oil in the same type of car. Which of the following statements is TRUE?

A)Chanda has an absolute advantage over Deepa in changing the oil.
B)Deepa has an absolute advantage over Chanda in changing the oil.
C)Chanda has a comparative advantage over Deepa in changing the oil.
D)Deepa has a comparative advantage over Chanda in changing the oil.

Question 13

You have a comparative advantage if you can complete a task:

A)using more inputs than anyone else.
B)using fewer inputs than anyone else.
C)at a lower opportunity cost than anyone else.
D)at a higher opportunity cost than anyone else.

Question 14

If you can complete a task at a lower opportunity cost than anyone else, then you

A)produce the good using fewer inputs than anyone else.
B)produce the good using more inputs than anyone else.
C)have an absolute advantage in that task.
D)have a comparative advantage in that task.

Question 15

To get maximum output, you should allocate each task to the person who:

A)can do the task with the smallest amount of input.
B)can do the task with the lowest opportunity cost.
C)has an absolute advantage in completing the task.
D)has a cost advantage in completing the task.

Question 16

Mana has a comparative advantage in baking cakes. This means that she

A)produces better-quality cakes than any other cake baker.
B)has more education than other cake bakers.
C)can bake a cake using fewer resources than any other baker.
D)gives up less to bake a cake than other bakers give up to bake a cake.

Question 17

To maximize production, people should

A)focus on the task in which they have an absolute advantage.
B)focus on the task in which they have a comparative advantage.
C)learn all the skills so that they can perform any task needed.
D)focus on improving their weakest skills.

Question 18

(Table: Eray and Ata's opportunity cost) Data for Eray's and Ata's decorating is given in the table. Which statement explains who has the comparative advantage in decorating cakes? $$\begin{array}{l}\text { Eray and Ata Decorate Cakes and Cupcakes }\\\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Minutes to } \\\text { decorate a cake }\end{array} & \begin{array} { l } \text { Number of cupcakes that can be decorated } \\\text { in time it takes to decorate a cake }\end{array} \\\hline \text { Eray } & 120 & 24 \\\hline \text { Ata } & 130 & 20 \\\hline\end{array}\end{array}$$

A)Eray, who can decorate a cake in 120 minutes.
B)Ata, who can decorate a cake in 130 minutes.
C)Eray who gives up decorating 24 cupcakes when he decorates a cake.
D)Ata, who gives up decorating 20 cupcakes when he decorates a cake.

Question 19

(Table: Eray and Ata's opportunity cost) Data for Eray's and Ata's cake decorating is given, which statement explains who has the absolute advantage in decorating cakes? $$\begin{array}{l}\text { Eray and Ata Decorate Cakes and Cupcakes }\\\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Minutes to } \\\text { decorate a cake }\end{array} & \begin{array} { l } \text { Number of cupcakes that can be decorated } \\\text { in time it takes to decorate a cake }\end{array} \\\hline \text { Eray } & 120 & 24 \\\hline \text { Ata } & 130 & 20 \\\hline\end{array}\end{array}$$

A)Eray can decorate a cake in 120 minutes.
B)Ata can decorate a cake in 130 minutes.
C)Eray gives up decorating 24 cupcakes when he decorates a cake.
D)Ata gives up decorating 20 cupcakes when he decorates a cake.

Question 20

(Table: Comparative Advantage for Asha and Sabra) Data for Asha and Sabra are given in the table. Which statement explains who has the comparative advantage in making a sandwich? $$\begin{array}{l}\text { Asha and Sabra make sandwiches }\\\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Minutes to make a } \\\text { sandwich }\end{array} & \begin{array} { l } \text { Number of carrots that couild be sliced into carrot } \\\text { sticks in time it takes to make a sandwich. }\end{array} \\\hline \text { Asha } & 10 & 3 \\\hline \text { Sabra } & 13 & 2 \\\hline\end{array}\end{array}$$

A)Asha, she can make a sandwich in 10 minutes.
B)Sabra, as she can make a sandwich in 13 minutes.
C)Asha, she gives up slicing three carrots into carrot sticks every time she makes a sandwich.
D)Sabra, she gives up slicing two carrots into carrot sticks every time she makes a sandwich.

Question 21

Use the data in the table to answer the question. The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds.
Who has a comparative advantage in mowing lawns?

A)Maia because she can mow the lawn more quickly
B)Juanita because she takes the time to mow carefully
C)Maia because she has a lower opportunity cost
D)Juanita because she has a lower opportunity cost

Question 22

(Table: Maia and Juanita's opportunity cost) The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds.
Who has a comparative advantage in weeding the flower beds?

A)Maia because she can weed the beds more quickly.
B)Juanita because she takes the time to weed the beds carefully.
C)Maia because she has a lower opportunity cost.
D)Juanita because she has a lower opportunity cost.

Question 23

(Table: Comparative Advantage for Mia and Juanita) The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds.
Maia's opportunity cost for mowing the lawn is _____, and Juanita's opportunity cost for mowing the lawn is _____.

A)weeding three flower beds; weeding two flower beds
B)weeding one flower bed; weeding two flower beds
C)weeding one-third of a flower bed; weeding one-half of a flower bed
D)weeding one-half of a flower bed; weeding three-quarters of a flower bed

Question 24

(Table: Joachim and Zane's opportunity cost) The table provides data on how long it takes Joachim and Zane to clean the bathrooms and wash the windows at a home.
Joachim's opportunity cost for cleaning bathrooms is _____, and Zane's opportunity cost for cleaning bathrooms is _____.

A)the windows washed 2.5 times; the windows washed two times
B).4 of the windows washed; .5 of the windows washed
C)the windows washed 10 times; the windows washed six times
D).75 of the windows washed; .6 of the windows washed

Question 25

(Table: Joachim and Zane's opportunity cost) The table shows data on how long it takes Joachim and Zane to clean the bathrooms and wash the windows at a home.
Who has a comparative advantage in washing windows?

A)Zane because he has absolute advantage.
B)Joachim because he has absolute advantage.
C)Zane because he has a lower opportunity cost.
D)Joachim because he has a lower opportunity cost.

Question 26

(Table: Time taken to clean). The table provides data on how long it takes Joachim and Zane to clean the bathrooms and wash the windows at a home. Who has a comparative advantage in cleaning bathrooms and why?

A)Zane because he has absolute advantage in cleaning bathrooms.
B)Joachim because he has absolute advantage in cleaning bathrooms.
C)Zane because he has a lower opportunity cost in cleaning bathrooms.
D)Joachim because he has a lower opportunity cost in cleaning bathrooms.

Question 27

People are capable of completing many different tasks, each person's comparative advantage is in the particular task that they

A)can do better than anyone else.
B)enjoy doing the most.
C)can produce more of than any other task.
D)are least bad at doing, relative to other tasks.

Question 28

Which of the following statements is TRUE regarding comparative advantage and absolute advantage?

A)People can have a comparative advantage without having an absolute advantage in a task.
B)People can have a comparative advantage only if they also have an absolute advantage in a task.
C)People can have an absolute advantage only if they also have a comparative advantage in a task.
D)People can have no comparative and no absolute advantages in any of the tasks.

Question 29

Which of the following is NOT used in identifying who has a comparative advantage in a particular task when multiple people can perform that task and another one? (Note: The tasks are not necessarily listed in chronological order.)

A)Identify who has the lowest opportunity cost in performing the task.
B)For each person, calculate how much of the alternative task could have been done in the time it takes to perform the desired task.
C)For each person, calculate the total time it takes to perform both tasks consecutively.
D)Identify how long it takes each person to perform each task.

Question 30

People have different abilities for performing the same two tasks, and you want to identify who has a comparative advantage in one of the tasks. Which of the following is NOT one of the three steps for identifying, who has a comparative advantage in performing the selected task?

A)Determine how many hours it takes to perform each task for each person.
B)For each person, calculate the time it takes to do one task in terms of the other.
C)Determine which person has the lowest opportunity cost in performing the selected task.
D)Identify which person can perform the selected task most quickly.

Question 31

(Table: Cooking time). The table provides data on how long it takes Marla and Jason to cook lasagna and cook chicken curry.
Marla's opportunity cost of making lasagna is _____, and Jason's opportunity cost is _____.

A).75 of an hour; .33 of an hour
B).75 of a chicken curry; .33 of a chicken curry
C)1.33 hours; three hours
D)1.33 chicken curries; three chicken curries

Question 32

(Table: Cooking times). The table provides data on how long it takes Marla and Jason to cook lasagna and cook chicken curry.
Marla's opportunity cost of making chicken curry is _____, and Jason's opportunity cost is _____.

A).75 of an hour; .33 of an hour
B).75 of a lasagna; .33 of a lasagna
C)1.33 hours; three hours
D)1.33 lasagna; three lasagna

Question 33

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry.
Which statement explains who has a comparative advantage in cooking lasagna?

A)Marla because she has a lower opportunity cost than Jason.
B)Jason because he has a lower opportunity cost than Marla.
C)Marla because she can cook lasagna faster than Jason.
D)Jason because he can cook lasagna faster than Marla.

Question 34

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna and cook chicken curry.
Which statement explains who has a comparative advantage in cooking chicken curry?

A)Marla because she has a lower opportunity cost than Jason.
B)Jason because he has a lower opportunity cost than Marla.
C)Marla because she can cook lasagna faster than Jason.
D)Jason because he can cook lasagna faster than Marla.

Question 35

(Table: Fazio and Gabriella's opportunity cost) The table provides data on how long it takes Fazio and Gabriella to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question.
Fazio's opportunity cost of learning the song is _____, and Gabriella's opportunity cost is _____.

A)two tax returns; 1.25 tax returns
B).5 of a tax return; .8 of a tax return
C)nine hours; two hours
D).8 of an hour; .5 of an hour

Question 36

(Table: Fazio and Gabriella's opportunity cost) The table provides data on how long it takes Fazio and Gabriella each to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question.
Fazio's opportunity cost of completing tax returns is _____, and Gabriella's opportunity cost is _____.

A)two new songs learned; 1.25 new songs learned
B).5 of a new song learned; .8 of a new song learned
C)nine hours; two hours
D).8 of an hour; .5 of an hour

Question 37

(Table : Fazio and Gabriella's opportunity cost) The table provides data on how long it takes Fazio and Gabriella each to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question.
Which statement explains who has a comparative advantage in learning a new song?

A)Fazio because he learns a new song more quickly than Gabriella.
B)Gabriella because she can learn the song more quickly than Fazio.
C)Fazio because he gives up fewer completed tax returns when he learns a new song.
D)Gabriella because she gives up fewer completed tax returns when she learns a new song.

Question 38

(Table: Fazio and Gabriella's opportunity cost) The table provides data on how long it takes Fazio and Gabriella each to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question.
Which statement explains who has a comparative advantage in completing tax returns?

A)Fazio because he completes a tax return more quickly than Gabriella.
B)Gabriella because she completes a tax return more quickly than Fazio.
C)Fazio because he gives up learning fewer new songs when he completes a tax return.
D)Gabriella because she gives up learning fewer new songs when she completes a tax return.

Question 39

(Table: Bruno and Sasha's comparative advantage) The table provides data on the number of minutes it takes for Bruno and Sasha to change a tire and iron a dress shirt. Use the data to answer the question.
Which statement explains who has a comparative advantage in changing a tire?

A)Sasha because she has a higher opportunity cost
B)Bruno because he has a higher opportunity cost
C)Sasha because she has a lower opportunity cost
D)Bruno because he has a lower opportunity cost

Question 40

(Table: Bruno and Sasha's opportunity cost) The table provides data on the number of minutes it takes for Bruno and Sasha to each change a tire and iron a dress shirt. Use the data to answer the question.
Which statement explains who has a comparative advantage in ironing a dress shirt?

A)Sasha because she has a higher opportunity cost.
B)Bruno because he has a higher opportunity cost.
C)Sasha because she has a lower opportunity cost.
D)Bruno because he has a lower opportunity cost.

Question 41

(Table: Bruno and Sasha's opportunity cost) The table provides data on the number of minutes it takes for Bruno and Sasha to each change a tire and iron a dress shirt. Use the data to answer the question.
When changing a car's tire, Bruno's opportunity cost is _____, and Sasha's opportunity cost is _____.

A).6 of an ironed dress shirt; .67 of an ironed dress shirt
B).67 of an ironed dress shirt; .6 of an ironed dress shirt
C)1.67 ironed dress shirts; 1.5 ironed dress shirts
D)1.5 ironed dress shirts; 1.67 ironed dress shirts

Question 42

(Table: Bruno and Sasha's opportunity cost) The table provides data on the number of minutes it takes for Bruno and Sasha to each change a tire and iron a dress shirt. Use the data to answer the question.
When ironing a dress shirt, Bruno's opportunity cost is _____, and Sasha's opportunity cost is _____.

A).6 of a tire changed; .67 of a tire changed
B).67 of a tire changed; .6 of a tire changed
C)1.67 tires changed; 1.5 tires changed
D)1.5 tires changed; 1.67 tires changed

Question 43

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures?

A)Barlow because he is faster.
B)Rusia because she is faster.
C)Barlow because he has a lower opportunity cost.
D)Rusia because she has a lower opportunity cost.

Question 44

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in manicures?

A)Barlow because he is faster.
B)Rusia because she is faster.
C)Barlow because he has a lower opportunity cost.
D)Rusia because she has a lower opportunity cost.

Question 45

(Table: Four individuals )The table lists the hours that it will take four individuals to clean out a garage and to trim a property's hedges.
Who has a comparative advantage in cleaning out the garage?

A)Frank
B)Matt
C)Amy
D)Jane

Question 46

(Table: Four individuals) The table lists the hours that it will take four individuals to clean out a garage and to trim a property's hedges.
​
Who has a comparative advantage in trimming the hedges?

A)Person B
B)Person A
C)Person C
D)Person D

Question 47

(Table: Four persons) The table lists the minutes that it will take four people to wash a car and to sort and fold a load of laundry. Use the data to answer the question.
Who has a comparative advantage in washing a car?

A)Asad
B)Junko
C)Jason
D)Jen

Question 48

(Table: Four Persons) The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. Use the data to answer the question.
Who has a comparative advantage in sorting and folding a load of laundry?

A)Asad
B)Junko
C)Jason
D)Jen

Question 49

(Table: Four persons) The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. Use the data to answer the question.
What is Junko's opportunity cost for washing a car?

A)0.42 of a load of laundry will not be sorted and folded.
B)2.4 loads of laundry will not be sorted and folded.
C)70 minutes will be given up.
D)50 minutes will be given up.

Question 50

(Table: Four Persons) The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. Use the data to answer the question.
What is Jason's opportunity cost for sorting and folding a load of laundry?

A)0.5 of a car will not be washed.
B)Two cars will not be washed.
C)45 minutes will be given up.
D)90 minutes will be given up.

Question 51

(Table: Both Joyce and Simeon can cook) Both Joyce and Simeon can cook chicken gumbo and pork chops. Use the data to answer the question.
What will be the total output of chicken gumbo and pork chops if Joyce and Simeon each work for 24 hours on the task for which they each have a comparative advantage?

A)Eight chicken gumbos and eight pork chops.
B)7.5 chicken gumbos and 24 pork chops.
C)15.5 chicken gumbos and 24 pork chops.
D)15.5 chicken gumbos and 32 pork chops.

Question 52

When people focus their efforts, on the tasks they have a comparative advantage in, what will happen to output?

A)There will be less total output, but the output will grow for highly valued goods.
B)The total output will shrink because it is not produced by the person who can do it fastest.
C)Total output will rise and automatically be equally distributed across persons.
D)More of all goods will be produced than if everyone produced everything for themselves.

Question 53

Nguyen manages a supply chain team. If she uses the concept of comparative advantage for assigning tasks to members of her team, then

A)the team's output will consist of a wide range of goods.
B)the team's output will vary more in quality.
C)more can be accomplished.
D)less will be accomplished.

Question 54

Otto manages a consulting firm. If Otto wants his employees to produce as much as possible from the resources available, how should tasks be assigned?

A)The employee who is best at each task should be the one assigned to do it.
B)Each task should be assigned to the employee who can do it at the lowest opportunity cost.
C)Each employee should be cross-trained in all tasks to increase flexibility in assignments.
D)Each task should be assigned to the employee who can do it at the highest absolute advantage.

Question 55

What concept would a factory manager make use of to assign tasks if he wants to maximize output and has a fixed amount of resources?

A)Opportunity revenues
B)Trade incentives
C)Absolute advantage
D)Comparative advantage

Question 56

Mara manages a yogurt factory where four main tasks are performed to produce the yogurt. What basis should she use to assign workers to the tasks if she wants to produce as much yogurt as possible?

A)Workers should specialize in the task for which they have a comparative advantage.
B)Workers should specialize in the task for which they have an absolute advantage.
C)Workers should be cross-trained in all tasks to maximize flexibility in assignments.
D)Each task should be done by the worker who can do it fastest.

Question 57

When a manager uses comparative advantage to assign tasks in a workplace, then each

A)task is assigned to the worker who is best at doing the task.
B)worker is assigned to the tasks for which he or she has the highest aptitude and efficiency.
C)worker learns how to do all tasks to increase flexibility in assignments.
D)task is assigned to the worker with the lowest opportunity cost for performing the task.

Question 58

When your employees receive work assignments based on who has the lowest opportunity cost in performing each task, the basis for the work assignments is

A)work-based efficiency.
B)absolute advantage.
C)comparative advantage.
D)absolute cost.

Question 59

Artem manages a coat factory where the main tasks are cutting, sewing, and pressing. Workers vary in their abilities to do each task. What basis should Artem use to assign the workers?

A)Each worker should do all tasks to see who produces a coat most quickly.
B)Each worker should do the task that he or she can do most quickly, compared to other workers.
C)Each worker should do the task that he or she can do at the lowest opportunity cost, compared to other workers.
D)Each worker should do two of the three tasks, omitting the one that takes the longest to do.

Question 60

Helena works in a factory that makes plastic phone cases. The four main tasks are mixing, molding, curing, and polishing. Out of all the workers, she is the fastest mixer, has the lowest opportunity cost for molding, is the most careful in curing, and enjoys polishing the most. If her manager makes assignments in a way that maximizes output, then she will be assigned to

A)mixing.
B)molding.
C)curing.
D)polishing.

Question 61

Raul works at a factory that produces wooden benches. The four main tasks are cutting the wood, constructing, sanding, and staining. Out of all the workers, Raul enjoys cutting the most, is the slowest at constructing, has the lowest opportunity cost for sanding, and is the fastest at staining. If his manager wants to maximize factory output, he will assign Raul to

A)cutting.
B)constructing.
C)sanding.
D)staining.

Question 62

Which of the following is a FALSE statement about assigning work based on comparative advantage?

A)Assign the person who is fastest or best at a task to do that task.
B)The person who has absolute advantage in the task will sometimes be assigned to do it.
C)Workers will be specialists and not generalists.
D)The person with the lowest opportunity cost at a task should perform it.

Question 63

Which of the following is a TRUE statement about work assignments based on comparative advantage?

A)The person who is fastest at a task should be assigned to perform it.
B)Absolute advantage in the task should be the basis for making task assignments.
C)Workers should be cross-trained as generalists and should not be specialists.
D)The person with the lowest opportunity cost at a task should perform it.

Question 64

If Ilona wants to live her life based on comparative advantage, then she should

A)try to earn as much as possible so that she can buy as much as possible.
B)do those things for herself that she can do most quickly and then trade with others.
C)focus her time on the things she can do.
D)do for herself the things for which she has low opportunity cost and trade with others for things she has a high opportunity cost.

Question 65

The principle of comparative advantage applies to interactions

A)between people but not in business production decisions.
B)in business production decisions but not between people.
C)between people as well as in business production decisions.
D)in neither business production decisions nor between people.

Question 66

When everyone produces according to their comparative advantage, then they

A)gain from trade.
B)produce things for which they have a high opportunity cost.
C)are self-reliant, producing most of the things they need.
D)trade very little.

Question 67

Comparative advantage explains why people

A)try to gain a wide range of skills.
B)work at the job they love the most.
C)specialize and trade.
D)lack focus in their production decisions.

Question 68

Specialization will increase output when it is based on:

A)who can produce at the least comparative cost.
B)absolute advantage.
C)who can produce the fastest.
D)comparative advantage.

Question 69

If Bishan wants to capitalize on comparative advantage in his life, then he should:

A)compare his preferences to those of others and trade with those who like things he does not like.
B)produce either goods or services but not both.
C)do more of what he is relatively good at and then trade for other things.
D)do more of what he has an absolute advantage in and trade for other things.

Question 70

Katie is much faster than her husband, Brett, at putting up a tent and starting a fire. Who should take care of these tasks on their camping trip if they want to maximize their time sitting around a campfire?

A)They each have a comparative advantage in a particular task, and they should focus on doing that. Katie can help Brett when she finishes her task.
B)They should complete both tasks together, sharing all the work.
C)Katie should complete both tasks because she is a more efficient worker. Brett could watch and learn from her.
D)Katie should be in charge, directing the work while Brett does it.

Question 71

What institution allows people to gain access to others who have different comparative advantages without meeting them or communicating directly with them?

A)Families
B)Community gatherings
C)Government
D)Markets

Question 72

When people focus on their comparative advantage and then trade for other things, they:

A)improve their standard of living or increase their leisure time.
B)focus their consumption on just a few things.
C)increase the time they spend working and reduce the variety in their consumption.
D)have a lower standard of living than if they focused on their absolute advantage.

Question 73

Why would Emerald benefit from specializing based on comparative advantage?

A)She could enhance her living standards.
B)She would be doing what she loves most.
C)She would have a wide variety of skills.
D)She could save her income rather than spend it.

Question 74

Which of the following pieces of advice is consistent with the principle of comparative advantage?

A)If someone else is faster than you at a task, trade with them, so they do it for you.
B)Focus on what you do best.
C)Focus on what you are relatively good at doing, even if you are not the best at it.
D)Relative preferences are key to understanding who should do what.

Question 75

Which of the following headlines is NOT consistent with the principle of comparative advantage?

A)Island lessens welfare by promoting trade.
B)Famous actress hires a new nanny.
C)Providers of household services see growth in demand.
D)Consultant recommends workforce specialization.

Question 76

What is the basis of specialization?

A)Absolute advantage
B)Comparative advantage
C)Trade enhancement
D)Incentive enhancement

Question 77

Which of the following statements is FALSE?

A)The principle of comparative advantage applies to trade between buyers and sellers in different countries.
B)The principle of comparative advantage applies to trade between people and companies.
C)The principle of comparative advantage explains why people specialize.
D)The principle of comparative advantage explains why companies do not specialize.

Question 78

When trade is based on comparative advantage

A)output may fall.
B)specialization will diminish.
C)both trading partners end up better off.
D)one trading partner gains at the expense of the other.

Question 79

Which of the following statements about international trade is TRUE?

A)After trade, one country gains, and the other is worse off.
B)If trade occurs, people's welfare will worsen.
C)Producers in different countries should specialize in the production of goods for which their opportunity cost is low.
D)International trade is based on absolute advantage.

Question 80

When a country's production mix becomes more specialized due to increased international trade based on comparative advantage

A)some industries in the country will shrink and possibly disappear.
B)all industries in the country will grow as the economy grows from the trade.
C)the losses in industries without comparative advantage will offset the gains from trade.
D)the country will find it has less need for trade in the future.