Deck 3: International Trade and Trade Policy

Question 1

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

A) comparative advantage
B) absolute advantage
C) comparative advantage and an absolute advantage
D) absolute advantage and possibly a comparative advantage.

Answer 1

comparative advantage

Question 2

Larry has a comparative advantage over his classmates in writing term papers if he:

A) can write term papers faster than his classmates.
B) has an absolute advantage in writing term papers.
C) always earns an A on his term papers.
D) has a lower opportunity cost of writing term papers than his classmates.

Answer 2

has a lower opportunity cost of writing term papers than his classmates.

Question 3

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:

A) Les has a comparative advantage in producing pants.
B) Les has an absolute advantage in producing pants.
C) Eva has a comparative advantage in producing pants.
D) Les has both comparative and absolute advantage in producing pants.

Answer 3

Les has an absolute advantage in producing pants.

Question 4

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?

A) Dan has the comparative advantage in smoothies, but Tracy has the absolute advantage in smoothies.
B) Dan has the comparative and absolute advantage in sandwiches.
C) Dan has the comparative and absolute advantage in smoothies.
D) Dan has the comparative advantage in sandwiches, but Tracy has the absolute advantage in sandwiches.

Question 5

If Al has an absolute advantage over Beth in preparing meals, then:

A) it takes Al more time to prepare a meal than Beth.
B) the problem of scarcity applies to Beth but not to Al.
C) Al's opportunity cost of preparing a meal is lower than is Beth's.
D) Al can prepare more meals in a given time period than Beth.

Question 6

An individual has an absolute advantage in producing pizzas if that individual:

A) has a lower opportunity cost of producing pizzas than anyone else.
B) can produce more pizzas in a given amount of time than anyone else.
C) has a higher opportunity cost of producing pizzas than anyone else.
D) charges the lowest price for pizzas.

Question 7

If you have a comparative advantage in a particular task, then:

A) you are better at it than other people.
B) you give up more to accomplish that task than do others.
C) you give up less to accomplish that task than do others.
D) you have specialized in that task, while others have not.

Question 8

If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ______ has a(n) ______ advantage in producing shoes.

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

Question 9

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?

A) Tracy should specialize in sandwiches and smoothies.
B) Dan should specialize in smoothies, and Tracy should specialize in sandwiches.
C) Dan should specialize in sandwiches, and Tracy should specialize in smoothies
D) Dan should specialize in both sandwiches and smoothies.

Question 10

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich?

A) 1/3 of a smoothie
B) 3 smoothies
C) 15 smoothies
D) 5 smoothies

Question 11

Refer to the table above. Based on their comparative advantage, Martha should specialize in _______ while Julia should specialize in _______.

A) pies; cakes
B) cakes; pies
C) neither pies nor cakes; both pies and cakes
D) both pies and cakes; neither pies nor cakes

Question 12

Refer to the table below. Martha's opportunity cost of making of a pie is:

A) 3/4 of a cake.
B) 4/3 of a cake.
C) 8 cakes
D) 80 cakes

Question 13

Refer to the table below. Julia's opportunity cost of making a pie is:

A) 60 cakes
B) 6 cakes
C) 6/5 of a cake
D) 5/6 of a cake

Question 14

Refer to the table below. ______ has the comparative advantage in making pies and ______ the comparative advantage in making cakes.

A) Martha; Martha
B) Julia; Julia
C) Martha; Julia
D) Julia; Martha

Question 15

Refer to the table below. According to the table, Julia has the absolute advantage in:

A) pies.
B) neither pies nor cakes.
C) cakes.
D) both pies and cakes.

Question 16

Refer to the table below. Martha's opportunity cost of making a cake is:

A) 3/4 of a pie.
B) 4/3 of a pie.
C) 6 pies
D) 60 pies

Question 17

Refer to the table below. Julia's opportunity cost of making a cake is:

A) 60 cakes
B) 6 cakes
C) 6/5 of a cake
D) 5/6 of a cake

Question 18

Refer to the table below. According to the table, Martha has the absolute advantage in:

A) pies.
B) neither pies nor cakes.
C) cakes.
D) both pies and cakes.

Question 19

Which of the following statements is true?

A) Absolute advantage implies comparative advantage.
B) Comparative advantage does not require absolute advantage.
C) Absolute advantage requires comparative advantage.
D) Comparative advantage requires absolute advantage.

Question 20

If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers.

A) comparative
B) absolute
C) relative
D) natural

Question 21

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. Which of the following is true?

A) Lou has both an absolute advantage and a comparative advantage over Alex in both tasks.
B) Alex has a comparative advantage over Lou in cleaning.
C) Lou has a comparative advantage over Alex in cleaning.
D) Alex has both an absolute advantage and a comparative advantage over Lou in both tasks.

Question 22

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

A) Cathy should specialize in both pies and cakes.
B) There are no gains from specialization and trade.
C) Lewis should specialize in pies, and Cathy should specialize in cakes.
D) Cathy should specialize in pies, and Lewis should specialize in cakes.

Question 23

Refer to the table below. ______ has the comparative advantage in making pizza, and ______ has the comparative advantage in delivering pizza.

A) Corey; Corey
B) Pat; Pat
C) Pat; Corey
D) Corey; Pat

Question 24

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, ______ has an absolute advantage in selling cars and ______ has an absolute advantage in selling trucks.

A) Joe; Joe
B) Larry; Ralph
C) Ralph; Larry
D) Larry; Joe

Question 25

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. If Alex and Lou work out an efficient arrangement for these two chores, then under that arrangement:

A) Alex and Lou each would do half of the cooking and half of the cleaning.
B) Alex would do all of the cleaning, while Lou would do all the cooking.
C) Lou would do all of the cleaning and all of the cooking.
D) Lou would do all of the cleaning, while Alex would do all of the cooking.

Question 26

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. What is the opportunity cost to Cathy of making a cake?

A) 2/3 of a pie.
B) 1 pie.
C) 1.5 pies.
D) 1.33 pies.

Question 27

Refer to the table below. Pat's opportunity cost of delivering a pizza is making:

A) 12 pizzas
B) 10 pizzas
C) 3/2 of a pizza
D) 2/3 of a pizza

Question 28

Refer to the table below. Pat's opportunity cost of making a pizza is delivering:

A) 3 pizzas
B) 2 pizzas
C) 3/2 of a pizza
D) 2/3 of a pizza

Question 29

Suppose it takes Paul 3 hours to bake a cake and 2 hours to move the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?

A) Paul has the absolute advantage in baking cakes
B) Paul has the comparative in mowing the lawn
C) Paul has the comparative in baking cakes
D) Paul has the absolute advantage in mowing the lawn.

Question 30

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: . Based on last month's data, Joe's opportunity cost of selling a car is ______ than Ralph's, and Joe's opportunity cost of selling a car is ______ than Larry's.

A) less; greater
B) greater; less
C) less; less
D) greater; greater

Question 31

Refer to the table below. Based on their comparative advantages, Pat should specialize in _______, and Corey should specialize in _______.

A) delivering pizza; making pizza
B) making pizza; delivering pizza
C) neither making pizza nor delivering pizza ; both making pizza and delivering pizza
D) both making pizza and delivering pizza ; neither making pizza nor delivering pizza

Question 32

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. For Alex, the opportunity cost of cleaning one room is making ______ meal(s); for Lou the opportunity cost of cleaning one room is making ______ meal(s).

A) 4; 4
B) 1; 4/5
C) 1; 5/4
D) 3; 5

Question 33

Refer to the table below. According to the table, Corey has the absolute advantage in:

A) making pizza.
B) neither making nor delivering pizza.
C) delivering pizza.
D) making and delivering pizza.

Question 34

Refer to the table below. According to the table, Pat has the absolute advantage in:

A) making pizza.
B) neither making nor delivering pizza.
C) delivering pizza.
D) making and delivering pizza.

Question 35

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Ralph's opportunity cost of selling a truck is selling:

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

Question 36

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Larry's opportunity cost of selling a truck is selling:

A) 10 cars.
B) 1/2 of a car.
C) 1 car.
D) 2 cars.

Question 37

Refer to the table below. Corey's opportunity cost of delivering of a pizza is making:

A) 6 pizzas.
B) 12 pizzas.
C) 2 pizzas.
D) 1/2 of a pizza

Question 38

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

A) Cathy has a comparative advantage in pies, and Lewis has an absolute advantage in pies
B) Cathy has a comparative and absolute advantage in pies.
C) Lewis has a comparative and absolute advantage in pies.
D) Lewis has a comparative advantage in pies, and Cathy has an absolute advantage in pies.

Question 39

Refer to the table below. Corey's opportunity cost of making of a pizza is delivering:

A) 2 pizzas.
B) 3/2 of a pizza.
C) 2/3 of a pizza.
D) 1/2 of a pizza.

Question 40

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Joe's opportunity cost of selling a truck is selling:

A) 9 cars.
B) 1 car.
C) 4 cars.
D) 1/3 of a car.

Question 41

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour efficiently, then Smith should spend ______, and Jones should spend ______.

A) 1 hour on computers; 40 minutes on computers and 20 minutes on calculators
B) 1 hour on computers; 20 minutes on computers and 40 minutes on calculators
C) 30 minutes on each; 30 minutes on each
D) 45 minutes on computers and 15 on calculators; 1 hour on calculators

Question 42

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. If Smith and Jones are dividing their time efficiently and producing fewer than 10 computers and more than 120 calculators per hour, then Smith will ______ and Jones will ______.

A) split his time between computers and calculators; produce only calculators
B) produce only calculators; split his time between computers and calculators
C) produce only calculators; produce only computers
D) produce only computers; produce only calculators

Question 43

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Suppose Earth Movers & Shakers needs to fill an order for 60 tons of ore in a single day. If it has no other orders for that day, it should:

A) take it all from Mother Lode.
B) take it all from Middle Drift.
C) take 30 tons from Scraping Bottom and 30 tons from Middle Drift.
D) take 20 tons from each of the three mines.

Question 44

A country is most likely to have a comparative advantage in the production of cars if:

A) it imports most of the raw materials necessary to produce cars.
B) its citizens prefer driving cars to other forms of transportation.
C) it has strict environmental protection laws governing automobile emissions.
D) it has a relative abundance in the natural resources needed to produce cars.

Question 45

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:

A) the average quality of batters has fallen.
B) the league imposes harsh penalties for steroid use.
C) specialization by pitchers, infielders, and outfielders has made it harder for batters to hit.
D) baseball diamonds have become larger.

Question 46

In general, individuals and nations should specialize in producing those goods for which they have a(n):

A) absolute advantage.
B) comparative advantage.
C) absolutely comparative advantage.
D) absolute advantage and a comparative advantage.

Question 47

The United States was unable to maintain its dominance in the production of televisions because:

A) the highly technical skills necessary to produce televisions are greater in other countries.
B) the raw materials necessary to build televisions became scarce in the United States.
C) the product designs evolved too rapidly for engineers in the United States to keep up.
D) automated techniques allowed production to be outsourced to countries with less-skilled workers.

Question 48

The emergence of English as the de facto world language has _____ a comparative advantage in the production of books, movies and popular music:

A) given English-speaking countries
B) given non-English-speaking countries
C) had no effect on which country has
D) given all countries

Question 49

The United States generally has a comparative advantage in the development of technology because it has:

A) large amounts of natural resources.
B) a disproportionate share of the world's best research universities.
C) the greatest need for new technology.
D) patent laws, which no other country has.

Question 50

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. The opportunity cost of moving one miner from Middle Drift to another mine is:

A) 1 ton per day.
B) 3 tons per day.
C) 4 tons per day.
D) 5 tons per day.

Question 51

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. If Smith and Jones are dividing their time efficiently and producing more than 10 computers and fewer than 120 calculators per hour, then Smith will ______ and Jones will ______.

A) produce only computers; produce only calculators
B) produce only computers; split his time between computers and calculators
C) split his time between computers and calculators; produce only computers
D) produce only calculators; produce only computers

Question 52

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. If Smith and Jones devote all of their resources to producing computers, then the maximum number of computers they can produce in an hour is:

A) 120.
B) 6.
C) 16.
D) 10.

Question 53

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. The opportunity cost of moving one miner from Mother Lode to another mine is:

A) 2 tons per day.
B) 3 tons per day.
C) 4 tons per day.
D) 1 ton per day.

Question 54

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore:

A) There are no gains to specialization and trade for Ginger.
B) There are no gains to specialization and trade for Maryann.
C) Maryann should specialize in the activity for which she has a comparative advantage.
D) Ginger should specialize in the activity for which she has an absolute advantage.

Question 55

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. The opportunity cost of moving one miner from Scraping Bottom to another mine is:

A) 0 tons per day.
B) 3 tons per day.
C) 4 tons per day.
D) 5 tons per day.

Question 56

In general, individuals and nations should specialize in producing goods ______ other individuals or nations.

A) that they can produce more quickly than
B) that they can produce less quickly than
C) for which they have a lower opportunity cost compared to
D) for which they have a higher opportunity cost compared to

Question 57

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Suppose Smith and Jones begin by producing 0 computers and 220 calculators per hour. If they wish to produce 2 computers and 200 calculators per hour efficiently, then Smith should spend ______, and Jones should spend ______.

A) 30 minutes on each; 30 minutes on each
B) 48 minutes on computers and 12 minutes on calculators; 1 hour on calculators
C) 1 hour on calculators; 10 minutes on computers and 50 minutes on calculators
D) 12 minutes on computers and 48 minutes on calculators; 1 hour on calculators

Question 58

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. The opportunity cost of making a calculator for Smith is ______ and for Jones it is ______.

A) 0.10 computers; 0.05 computers
B) 10 computers; 20 computers
C) 1 computer; 0.5 computers
D) 0.6 computers; 1.2 computers

Question 59

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Suppose Smith and Jones begin by producing 100 calculators per hour; as Smith and Jones choose to efficiently produce fewer computers and more calculators, ______ should devote more time to calculators because his ______.

A) Smith; absolute advantage is larger
B) Jones; absolute advantage is smaller
C) Jones; opportunity costs are lower
D) Smith; opportunity costs are lower

Question 60

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, ______ should specialize in truck sales, and ______ should specialize in car sales.

A) Joe; Ralph
B) Ralph; Larry
C) Larry; Ralph
D) Larry; Joe

Question 61

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Ricardo to produce one computer?

A) ¼ shirt
B) ½ shirt
C) 2 shirts
D) 4 shirts

Question 62

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one TV?

A) 1/5 radio
B) 1/3 radio
C) 5 radios
D) 10 radios

Question 63

If Atlantis has an open economy, then it:

A) trades with other countries
B) does not trade with other countries
C) has a democratically elected government
D) allows imports but not exports.

Question 64

An economy that does NOT trade with the rest of the world is a(n)

A) open economy
B) command economy
C) trade economy
D) closed economy

Question 65

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. To maximize total output, Paula should specialize in producing _____ while Ricardo should specialize in producing _______.

A) computers; shirts
B) shirts; computers
C) computers; computers
D) shirts; shirts

Question 66

You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:

A) Mary has an absolute advantage in gardening.
B) Joe has a comparative advantage in walking the dog.
C) Mary's opportunity cost of walking the dog is lower than Joe's.
D) Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog.

Question 67

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one shirt?

A) ¼ computer
B) ½ computer
C) 2 computers
D) 4 computers

Question 68

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Suppose Earth Movers & Shakers needs to fill an order for 100 tons of ore in a single day. If it has no other orders to fill that day, and it's not possible to transfer miners from one mine to another, it should:

A) take it all from Mother Lode.
B) take 75 tons from Middle Drift and 25 tons from Mother Lode.
C) take 75 tons from Middle Drift and 25 tons from Scraping Bottom.
D) take 30 tons from Scraping Bottom and 70 tons from Mother Lode.

Question 69

In general, a nation can enjoy a higher standard of living by ______ than by being self sufficient.

A) increasing its versatility
B) avoiding trade with other nations
C) specialization and trading
D) taxing imported goods

Question 70

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. ________ has the comparative advantage in computers and _______ has the comparative advantage in shirts.

A) Paula; Paula
B) Paula; Ricardo
C) Ricardo; Paula
D) Ricardo; Ricardo

Question 71

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the most of each good that can be produced each day if each worker fully specializes according to his/her comparative advantage?

A) 4 computers and 12 shirts.
B) 5 computers and 14 shirts
C) 6 computers and 16 shirts
D) 8 computers and 22 shirts

Question 72

The benefits of specialization can be used to explain why:

A) workers prefer to work on a variety of tasks during the day.
B) machines are more productive than human workers.
C) individuals and nations benefit from trade.
D) big companies take advantage of smaller ones.

Question 73

When a nation reduces the barriers to international trade:

A) each individual citizen becomes better off.
B) each individual citizen becomes worse off.
C) the total value of all goods and services produced by the nation falls.
D) the total value of all goods and serviced produced by the nation rises.

Question 74

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one computer?

A) ¼ shirt
B) ½ shirt
C) 1 shirt
D) 4 shirts

Question 75

If a nation restricts imports, it will:

A) benefit each individual citizen in that nation.
B) increase the total value of goods and services produced in that nation.
C) decrease the total value of goods and services produced in that nation.
D) harm each individual citizen in that nation.

Question 76

An economy that trades with the rest of the world is a(n) ________.

A) open economy
B) command economy
C) trade economy
D) closed economy

Question 77

One reason there is political opposition to international trade is that:

A) the potential gains from specialization and trade are small.
B) trade does not increase the total value of goods and services produced by a nation.
C) the differences in opportunity costs between countries are small.
D) not everyone benefits from trade.

Question 78

If country A can produce more of practically everything than can country B, then which of the following statements is true?

A) Country A has no incentive to trade with country B.
B) Country B cannot have a comparative advantage in the production of any good that country A wants to buy.
C) Trade can benefit both countries.
D) Country B has no incentive to trade with country A.

Question 79

An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Ricardo to produce one shirt?

A) ¼ computer
B) ½ computer
C) 2 computers
D) 4 computers

Question 80

If Fredonia has a closed economy, it _____ with other countries.

A) trades
B) does not trade
C) prevents its citizens from traveling to other countries but trades
D) does not negotiate