Deck 19: Comparative Advantage and the Open Economy

Question 1

Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size.In one hour,Ethan can pick 8 pounds of apples or 1 pound of oranges.Ava can pick 6 pounds of apples or 1 pound of oranges.It can be concluded that

A)Ava has a comparative advantage in picking apples.
B)Ava has an absolute advantage in picking apples.
C)Ethan has a comparative advantage in picking apples.
D)Ethan has an absolute advantage in picking oranges.

Answer 1

Ethan has a comparative advantage in picking apples.

Question 2

Since World War II,world trade has

A)decreased in importance as nations turn inward due to security concerns.
B)increased,but not as dramatically as annual world real GDP has climbed.
C)risen sharply,outpacing gains in annual world real GDP.
D)increased in relative importance for most nations,but not for the United States.

Answer 2

risen sharply,outpacing gains in annual world real GDP.

Question 3

Mason and Chloe each produce two goods.According to the principle of comparative advantage,the total output produced by these individuals will be greatest

A)if Chloe produces both goods and Mason produces nothing.
B)if each good is produced by the individual who has the lower opportunity cost of producing that good.
C)if each good is produced by the individual who has the higher absolute cost of producing that good.
D)if Mason produces both goods and Chloe produces nothing.

Answer 3

if each good is produced by the individual who has the lower opportunity cost of producing that good.

Question 4

Assume that U.S.producers can manufacture cookies at a lower opportunity cost than Mexican producers.If this is the case,

A)it will not be possible for Mexico to have an comparative advantage in the production of any other products.
B)Mexico could still have the comparative advantage in cookie production.
C)it would still be possible for Mexico to have a comparative advantage in trade for some other products.
D)Mexico would have the comparative advantage in all products compared to the United States.

Question 5

During the past 40 years,U.S.exports as a percent of GDP and U.S.imports as a percent of GDP

A)both rose at the same pace.
B)both fell at the same pace.
C)both rose,but U.S.imports as a percent of GDP rose at a faster pace.
D)both rose,but U.S.exports as a percent of GDP rose at a faster pace.

Question 6

For the United States since 1950,imports as a percentage of GDP has

A)tripled.
B)increased slightly.
C)remained constant.
D)decreased.

Question 7

The ability to produce a good or service at a lower opportunity cost than other producers is called

A)absolute advantage.
B)comparative advantage.
C)implicit advantage.
D)marginal advantage.

Question 8

Today,in the United States,imports are over

A)15 percent of GDP.
B)1 percent of GDP.
C)8 percent of GDP.
D)4 percent of GDP.

Question 9

Since 1950,the volume of world trade and the volume of world real GDP

A)have both increased at roughly the same rate.
B)have both decreased at roughly the same rate.
C)have both increased,but the volume of world trade has increased more slowly than the volume of world real GDP.
D)have both increased,but the volume of world trade has increased faster than the volume of world real GDP.

Question 10

Today,the share of international trade in U.S.GDP is

A)almost 0 percent.
B)about 10 percent.
C)close to 30 percent.
D)more than 99 percent.

Question 11

Specialization in trade will be economically efficient if it is based upon

A)national security needs.
B)absolute advantage.
C)comparative advantage.
D)government regulations.

Question 12

The importance of international trade in the U.S.economy

A)has been decreasing and is expected to continue to decrease.
B)has been decreasing but is expected to start to increase.
C)has been increasing and is expected to continue to increase.
D)has been increasing but is expected to decrease in the future.

Question 13

Discuss the relationship between world trade and world Gross Domestic Product (GDP)since the early 1950s.

Question 14

Given two economic systems,A and B,if economy A has a absolute advantage in the production of widgets,then

A)fewer inputs are necessary to produce widgets in economy A than in economy B.
B)economy A must give up less of all other goods to produce widgets than economy B.
C)economy A is less efficient in the production of widgets than economy B.
D)economy A would not benefit from the specialization of production.

Question 15

The principle of comparative advantage essentially states that

A)there are some goods for which the opportunity costs of production are the same regardless of who produces them.
B)some goods have high opportunity costs and low absolute costs.
C)specialization can reduce output rather than increase it.
D)total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.

Question 16

That each individual should engage in economic activities in which he or she is relatively more efficient is an application of the concept of

A)competition.
B)absolute advantage.
C)scarcity.
D)comparative advantage.

Question 17

Today,in the United States,exports are about

A)90 percent of GDP.
B)12 percent of GDP.
C)28 percent of GDP.
D)4 percent of GDP.

Question 18

According to the principle of comparative advantage,a nation should specialize in economic activities

A)that incur lower opportunity costs.
B)that incur higher opportunity costs.
C)for which it has an absolute advantage.
D)for which it has no absolute advantage.

Question 19

Given two economic systems,A and B,if economy A has a comparative advantage in the production of widgets,then

A)the inputs necessary to produce widgets in economy A cost less than in economy B.
B)economy A must give up less of all other goods to produce widgets than economy B.
C)economy A is less efficient in the production of some goods than economy B.
D)economy A would not benefit from the specialization of production.

Question 20

Since 1950,the balance of trade for United States has

A)gone from a surplus to a deficit.
B)gone from a deficit to a surplus.
C)remained constant.
D)gone from a small deficit to a larger deficit.

Question 21

$$\begin{array}{l}\text { Maximum Feasible Hourly Production Rate }\\\begin{array} { l l c } \hline& \text { Chen } & \text { Holly } \\\hline \text { Units of Good X } & 50 & 40 \\\text { Units of Good Y } & 25 & 100\\\hline\end{array}\end{array}$$

-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

A)25; 100
B)0.5; 2.5
C)2; 0.4
D)100; 25

Question 22

When the principle of comparative advantage determines trade,then a country will

A)specialize only in that good with the highest opportunity cost.
B)specialize only in goods with the lowest opportunity costs.
C)specialize only in that good where output is less per worker hour than another country.
D)specialize only in that good where production costs are more than average total costs.

Question 23

If country X can produce a unit of good 1 at a lower opportunity cost than can country Y,it is correct to state that country X

A)has a comparative advantage in producing good 1.
B)has an absolute advantage in producing good 1.
C)will import good 1 from country Y.
D)will not produce good 1.

Question 24

Consider the following information,and assume that opportunity costs are constant: On one hand,residents of Country A can produce more corn in a year than residents of Country B,but they can produce computers at a lower opportunity cost than residents of country B.On the other hand,residents of country B can produce more computers in a year than residents of Country A,but they can produce corn at a lower opportunity cost than residents of country A.It can be concluded that residents of

A)Country A should produce corn and trade it for computers produced in Country B.
B)Country B should produce computers and trade them for corn produced in Country B.
C)Country A should produce computers and trade them for corn produced in Country B.
D)both countries should choose not to trade.

Question 25

Comparative advantage is defined as

A)producing all goods at lower opportunity costs than other countries can.
B)producing more output of all goods than anyone else can.
C)producing one good at a lower opportunity cost than another country can.
D)the ability to produce more output from given inputs than anyone else can.

Question 26

Consider a world of two countries producing only wheat and cloth.In one hour,residents of Country A can produce 1 unit of wheat and 0.5 unit of cloth,whereas residents of Country B can produce 0.3 unit of wheat and 0.4 unit of cloth.Country A should export

A)wheat and cloth; country B should not export anything.
B)wheat and country B should export cloth.
C)nothing and country B should export both wheat and cloth.
D)cloth and country B should export wheat.

Question 27

Suppose that the opportunity cost of producing goods differs between two nations.We can correctly state that

A)the two nations should not specialize in the production of goods.
B)specialization can lead to an increase in the production of all goods.
C)specialization can lead to an increase in the consumption of all goods.
D)neither country has a comparative advantage in the production of any good.

Question 28

Suppose that opportunity costs in India and Australia are constant.In India,maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food.In Australia,maximum feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food.It is correct to state that

A)India has a comparative advantage in producing cloth.
B)India has a comparative advantage in producing both cloth and wheat.
C)India has no comparative advantage in producing cloth or wheat.
D)Australia has a comparative advantage in producing cloth.

Question 29

A country will specialize in the good for which

A)it has absolute advantage.
B)it has moderate production costs.
C)it can produce at minimum average cost.
D)it has comparative advantage.

Question 30

If Abigail can produce 4 tablets or 3 radios in a day,while Jacob can produce 1 tablet or 2 radios,then it is correct to state that

A)Abigail has a comparative advantage in producing radios.
B)Abigail has an absolute advantage in producing computers but not radios.
C)Jacob has a comparative advantage in radios.
D)Jacob has an absolute advantage in radios.

Question 31

Consider a world of two countries facing opportunity costs and producing only wheat and cloth.In one hour,residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of cloth,whereas residents of Country B can produce a maximum of either 0.3 unit of wheat or 0.4 unit of cloth.Country B should export

A)wheat and cloth; country A should not export anything.
B)wheat and country A should export cloth.
C)nothing and country A should export both wheat and cloth.
D)cloth and country A should export wheat.

Question 32

$$\begin{array}{l}\text { Maximum Feasible Hourly Production Rate }\\\begin{array} { l l c } \hline& \text { Chen } & \text { Holly } \\\hline \text { Units of Good X } & 50 & 40 \\\text { Units of Good Y } & 25 & 100\\\hline\end{array}\end{array}$$

-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,Chen has comparative advantage in production of

A)Good X.
B)Good Y.
C)both goods.
D)neither good.

Question 33

If Kami can produce 40 tablets or 30 radios during a month's time,while Sally can produce 10 tablets or 20 radios,then it is correct to state that

A)Kami has a comparative advantage in producing tablets.
B)Kami has a comparative advantage in producing both tablets and radios.
C)Sally has a comparative advantage in producing both tablets and radios.
D)Sally has an absolute advantage in tablets.

Question 34

Suppose that opportunity costs are constant in both France and Germany.In France,maximum feasible hourly production levels are either 3 units of wheat or 5 units of wine.In Germany,maximum feasible hourly production levels are either 4 units of wheat or 10 units of wine.It is correct to state that

A)Germany has an comparative advantage in producing both wheat and wine.
B)Germany has a comparative advantage in producing wine.
C)France has a comparative advantage in producing both wheat and wine.
D)France has a comparative advantage in producing wine.

Question 35

Specialization and international trade lead to

A)an outward shift in the production possibilities curve.
B)an inward shift in the consumption possibilities frontier.
C)a lower opportunity cost of domestic production of all goods.
D)an enhanced level of consumption.

Question 36

$$\begin{array}{l}\text { Maximum Feasible Hourly Production Rate }\\\begin{array} { l l c } \hline& \text { Chen } & \text { Holly } \\\hline \text { Units of Good X } & 50 & 40 \\\text { Units of Good Y } & 25 & 100\\\hline\end{array}\end{array}$$

-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,which of the following statements is TRUE?

A)Chen will be willing to produce only good X and trade units of that good to Holly as long as he receives more than 0.5 units of good Y from her in exchange.
B)Holly will be willing to produce only good X and trade units of that good to Chen as long as she receives less than 2.5 units of good Y in exchange.
C)Chen will be willing to produce only good Y and trade units of that good to Holly as long has he receives less than 2 units of good X from her in exchange.
D)Holly will be willing to produce only good Y and trade units of that good to Chen as long as she receives less than 0.4 unit of good X in exchange.

Question 37

Suppose Mexico has a comparative advantage relative to the United States in the manufacture of clothing and the United States has a comparative advantage in producing agricultural products.Which of the following is most likely to occur?

A)Mexico and the United States will not trade agricultural products or clothing.
B)Mexico will sell clothing to the United States and the United States will sell agricultural products to Mexico.
C)Mexico will sell agricultural products to the United States and Mexico will buy clothing from the United States.
D)Mexico will sell clothing to the United States but not buy any agricultural products from the United States.

Question 38

$$\begin{array}{l}\text { Maximum Feasible Hourly Production Rate }\\\begin{array} { l l c } \hline& \text { Chen } & \text { Holly } \\\hline \text { Units of Good X } & 50 & 40 \\\text { Units of Good Y } & 25 & 100\\\hline\end{array}\end{array}$$

-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,Holly has comparative advantage in production of

A)Good X.
B)Good Y.
C)both goods.
D)neither good.

Question 39

Consider a world with two countries and two goods.Under which of the following conditions does comparative advantage NOT exist?

A)One country can produce both goods more cheaply than the other country.
B)One country has more productive resources or inputs than another country.
C)The opportunity cost of producing each good is the same in each country.
D)One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good.

Question 40

$$\begin{array}{l}\text { Maximum Feasible Hourly Production Rate }\\\begin{array} { l l c } \hline& \text { Chen } & \text { Holly } \\\hline \text { Units of Good X } & 50 & 40 \\\text { Units of Good Y } & 25 & 100\\\hline\end{array}\end{array}$$

-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,the opportunity cost of producing one unit of Good Y is ________ units of Good X for Chen and ________ units of Good X for Holly.

A)50; 40
B)25; 10
C)2; 2/5
D)1/2; 2 1/2

Question 41

The ability to produce a good or service at a lower opportunity cost than other producers is

A)absolute advantage.
B)the quota system.
C)intellectual property.
D)comparative advantage.

Question 42

The ability to produce the same quantity of a good or service using fewer units of labor is known as

A)competitive dominance.
B)productive dominance.
C)comparative advantage.
D)absolute advantage.

Question 43

Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll} \hline Product & United States & Mexico \\\hline Computers & 8 & 2 \\Bicydes & 6 & 4 \\\hline\end{array}\end{array}$$

-According to the above table,if these two countries trade,

A)Mexico should export computers and the United States export bicycles.
B)the United States should import computers and Mexico should import bicycles.
C)the United States should export computers and Mexico should export bicycles.
D)we cannot tell which country should export which good without knowing the amount of labor utilized in each country.

Question 44

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources $$\begin{array} { l c r } \hline& \text { Food } & \text { Cloth } \\\hline \text { U.S. } & 4 & 3 \\\text { Mexico } & 12 & 6 \\\hline\end{array}$$

-Using the data in the above table and assuming constant opportunity costs,it is correct to state that

A)the United States has an absolute advantage in producing cloth.
B)Mexico has a comparative advantage in producing food.
C)the United States has a comparative advantage in producing both food and cloth.
D)Mexico has an absolute advantage in producing both food and cloth.

Question 45

Comparative advantage is

A)the ability to produce more output from given inputs than another producer can.
B)the ability to produce a good at a lower opportunity cost than other producers.
C)the ability to produce more output of all goods than anyone else can.
D)the ability to produce all goods at lower costs than anyone else can.

Question 46

If there are two goods and two countries,then one country can have

A)a comparative advantage in only one good.
B)a comparative advantage in both goods.
C)a higher opportunity cost of producing both goods.
D)a lower opportunity cost of producing both goods.

Question 47

Absolute advantage is

A)the ability to produce more output from given inputs than another producer can.
B)the ability to produce a good at a lower opportunity cost than other producers.
C)is always a relative concept.
D)the ability to produce all goods at lower costs than anyone else can.

Question 48

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources $$\begin{array} { l c r } \hline& \text { Food } & \text { Cloth } \\\hline \text { U.S. } & 4 & 3 \\\text { Mexico } & 12 & 6 \\\hline\end{array}$$

-Using the data in the above table and assuming constant opportunity costs,it is correct to state that

A)the United States has a comparative advantage in producing cloth.
B)Mexico has an absolute advantage in producing both food and cloth.
C)the United States has a comparative advantage in producing both food and cloth.
D)Mexico has a comparative advantage in producing cloth.

Question 49

Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll} \hline Product & United States & Mexico \\\hline Computers & 8 & 2 \\Bicydes & 6 & 4 \\\hline\end{array}\end{array}$$

-According to the above table,if these two countries trade,

A)Mexico should specialize in computers and the United States in bicycles.
B)the United States should specialize in both computers and bicycles.
C)the United States should specialize in computers and Mexico should specialize in bicycles.
D)we cannot tell which country should specialize in which good without knowing the amount of labor utilized in each country.

Question 50

Mary can clean 20 windows per hour or type 30 pages of paper per hour.Tom can clean 18 windows per hour or he can type 25 pages of paper per hour.Based on this

A)Mary has comparative advantages in activities.
B)Tom has comparative advantages in both activities.
C)Tom has a comparative advantage in cleaning windows.
D)Mary has a comparative advantage in cleaning windows.

Question 51

If country A exports good X to country B and country B exports good Y to country A,it is most likely that

A)A has an absolute advantage in the production of good X.
B)B has a comparative advantage in the production of good Y.
C)the opportunity cost of domestic production of good Y for country A is lowered with trade.
D)B is producing less of good Y than in the no-trade case.

Question 52

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources $$\begin{array} { l c r } \hline& \text { Food } & \text { Cloth } \\\hline \text { U.S. } & 4 & 3 \\\text { Mexico } & 12 & 6 \\\hline\end{array}$$

-Using the data in the above table,and assuming constant opportunity costs,it is likely that

A)the United States will export food.
B)Mexico will import cloth.
C)the United States will import both cloth and food.
D)Mexico will import both cloth and food.

Question 53

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources $$\begin{array} { l c r } \hline& \text { Food } & \text { Cloth } \\\hline \text { U.S. } & 4 & 3 \\\text { Mexico } & 12 & 6 \\\hline\end{array}$$

-Using the data in the above table,and assuming constant opportunity costs,it is likely that

A)the United States will import food.
B)Mexico will export cloth.
C)the United States will export both cloth and food.
D)Mexico will export both cloth and food.

Question 54

Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll} \hline Product & United States & Mexico \\\hline Computers & 8 & 2 \\Bicydes & 6 & 4 \\\hline\end{array}\end{array}$$

-According to the above table,if these two countries trade,

A)Mexico should import computers and the United States import bicycles.
B)the United States should import computers and Mexico should import bicycles.
C)the United States should export bicycles and Mexico should export computers.
D)we cannot tell which country should export which good without knowing the amount of labor utilized in each country.

Question 55

Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll} \hline Product & United States & Mexico \\\hline Computers & 8 & 2 \\Bicydes & 6 & 4 \\\hline\end{array}\end{array}$$

-According to economic historians,one result of international trade is that it

A)aids in the international transmission of ideas.
B)reduces the world-wide output of goods.
C)reduces the world-wide consumption of goods.
D)causes persistent world-wide inflation.

Question 56

Which of the following is counted as a benefit from international trade?

A)New production processes developed in one nation are transmitted to others.
B)Intellectual property such as music and computer applications is introduced throughout the world.
C)New goods have been introduced to other parts of the world.
D)All of the above are benefits from international trade.

Question 57

Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll} \hline Product & United States & Mexico \\\hline Computers & 8 & 2 \\Bicydes & 6 & 4 \\\hline\end{array}\end{array}$$

-Assuming that opportunity costs are constant,which of the following is a correct statement? (See the above table.

A)The United States has a comparative advantage in bicycle production.
B)The United States has a comparative advantage in producing both goods.
C)Mexico has a comparative advantage in producing bicycles.
D)Mexico has a comparative advantage in producing both goods.

Question 58

The ability to produce an item at a lower opportunity cost compared with other producers is known as

A)competitive dominance.
B)productive dominance.
C)comparative advantage.
D)absolute advantage.

Question 59

Comparative advantage is defined as

A)the ability to produce more output of one good relative to another good than another country can.
B)the ability to produce more output from given inputs of resources than others can.
C)the ability to use more input of resources than others can.
D)having a lower average fixed cost in the production of a good than does someone else.

Question 60

When nations specialize according to their comparative advantage

A)Total production and consumption in the world increase.
B)Consumption rises in one country but must fall in all others.
C)Total world production rises but total consumption in the world declines.
D)none of the above

Question 61

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {l ll } Product & United States & Mexico \\\hline Computers & 8 & 3 \\Bicycles & 2 & 6\end{array}\end{array}$$ a

-Refer to the above table.Assuming that opportunity costs are constant,the opportunity cost of producing a computer in the United States is equal to ________,and the opportunity cost of producing a computer in Mexico is ________.

A)4 bicycles; 0.5 bicycles
B)0.25 bicycle; 2 bicycles
C)2.67 computers; 0.33 bicycles
D)0.375 bicycle; 3 computers

Question 62

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Mexico \\\hline Computers & 8 & 10 \\Bicycles & 4 & 2\end{array}\end{array}$$

-Refer to the above table.If opportunity costs are constant,then the United States and Mexico will produce goods in which they have a comparative advantage and trade at a rate of exchange of

A)4 computers for 1 bicycle.
B)6 computers for 1 bicycle.
C)0.1 computer for 1 bicycle.
D)1 computer for 1 bicycle.

Question 63

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
$\begin{array}{l}\begin{array}{lll}\text { Product }&\text {Country } X& \text { Country } Y\\\text { A } & 4 & 8 \\\text { B } & 4 & 4\end{array}\end{array}$

-Refer to the above table.If opportunity costs are constant,then the opportunity cost of producing good B in country X is ________,and the opportunity cost of producing good B in country Y is ________.

A)1 unit of A; 2 units of A
B)1 unit of A; 0.5 unit of A
C)1 unit of B; 2 units of A
D)1 unit of A; 0.5 unit of B

Question 64

Maximum Feasible Hourly Production Rates of Either
Cuckoo Clocks or Movies Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Switzerland \\\hline Cuckoo Clocks & 4 & 2 \\Movies & 10 & 4\end{array}\end{array}$$

-Refer to the above table.If opportunity costs are constant,residents of the United States will gain from specializing and trading with Switzerland if the

A)produce both clocks and films and export clocks to Switzerland.
B)produce both clocks and films and export both to Switzerland.
C)import films and export clocks to Switzerland.
D)import clocks and export films.

Question 65

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Mexico \\\hline Computers & 8 & 10 \\Bicycles & 4 & 2\end{array}\end{array}$$

-Refer to the above table.It may be concluded that

A)Mexico has a comparative advantage in computer production.
B)Mexico has a comparative advantage in bicycle production.
C)The United States has a comparative advantage in producing both goods.
D)The United States has a comparative advantage in producing neither good.

Question 66

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
$\begin{array}{l}\begin{array}{lll}\text { Product }&\text {Country } X& \text { Country } Y\\\text { A } & 4 & 8 \\\text { B } & 4 & 4\end{array}\end{array}$

-Refer to the above table.If opportunity costs are constant and both countries produce only the goods for which they have comparative advantages and then trade,hourly world output would equal

A)4 units of product A and 4 units of product B.
B)8 units of product A and 4 units of product B.
C)8 units of product A and 8 units of product B.
D)12 units of product A and 8 units of product B.

Question 67

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
$\begin{array}{l}\begin{array}{lll}\text { Product }&\text {Country } X& \text { Country } Y\\\text { A } & 4 & 8 \\\text { B } & 4 & 4\end{array}\end{array}$

-Refer to the above table.Assuming constant opportunity costs,

A)neither country will be willing to engage in trade at any rate of exchange of product A for product B.
B)both countries will be willing to engage in trade at a rate of exchange of 0.3 unit of product A for 1 unit of product B.
C)both countries will be willing to engage in trade at a rate of exchange of 3 units of product A for 1 unit of product B.
D)both countries will be willing to engage in trade at a rate of exchange of 1.5 unit of product A for 1 unit of product B.

Question 68

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Mexico \\\hline Computers & 8 & 10 \\Bicycles & 4 & 2\end{array}\end{array}$$

-Refer to the above table.Assuming constant opportunity costs,the opportunity cost of producing a bicycle in the United States is ________ while the opportunity cost of producing a bicycle in Mexico is ________.

A)8 computers; 10 computer
B)4 computers; 10 computers
C)5 computers; 2 computers
D)2 computers; 5 computers

Question 69

Country A can product 100 units of Good X in a day and 40 units of Good Y while Country B can produce 50 units of Good X and 40 units of Good Y.

A)These countries will not trade since Country A has a comparative advantage in the production of both goods.
B)These countries will not trade since Country A will always be able to take advantage of Country B.
C)These countries should trade since Country A has a comparative advantage in the production of Good X and Country B has a comparative advantage in the production of Good Y.
D)These countries should trade since Country B has a comparative advantage in the production of Good X and Country A has a comparative advantage in the production of Good Y.

Question 70

Maximum Feasible Hourly Production Rates of Either
Cuckoo Clocks or Movies Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Switzerland \\\hline Cuckoo Clocks & 4 & 2 \\Movies & 10 & 4\end{array}\end{array}$$

-Based on the data in the above table,then if opportunity costs are constant,the opportunity cost of producing movies in the United States is ________,and the opportunity cost of producing movies in Switzerland is ________.

A)2 movies; 2 cuckoo clocks
B)2.5 movies; 0.4 cuckoo clocks
C)0.4 cuckoo clocks; 0.5 cuckoo clocks
D)2.5 cuckoo clocks; 2 cuckoo clocks

Question 71

If there are two goods and two countries,then one country can have

A)an absolute advantage in only one good.
B)an absolute advantage in both goods.
C)a higher opportunity cost of producing both goods.
D)a lower opportunity cost of producing both goods.

Question 72

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
$\begin{array}{l}\begin{array}{lll}\text { Product }&\text {Country } X& \text { Country } Y\\\text { A } & 4 & 8 \\\text { B } & 4 & 4\end{array}\end{array}$

-Refer to the above table.If opportunity costs are constant,each nation produces only the one good for which it has a comparative advantage,and trade can occur between the two countries,

A)country X will produce product A and country Y will produce product B.
B)country X will produce product B and country Y will produce product A.
C)country X will refuse to trade with country Y since country X has a comparative advantage in both products.
D)country Y will refuse to trade with country X since country Y has a comparative advantage in both products.

Question 73

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {l ll } Product & United States & Mexico \\\hline Computers & 8 & 3 \\Bicycles & 2 & 6\end{array}\end{array}$$ a

-Refer to the above table.If opportunity costs are constant and the two countries trade,

A)the United States should specialize in computers and Mexico in bicycles.
B)the United States should specialize in bicycles and Mexico in computers.
C)the United States should specialize in both bicycles and computers,and Mexico should specialize in neither.
D)there will be no trade because they are so different.

Question 74

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {l ll } Product & United States & Mexico \\\hline Computers & 8 & 3 \\Bicycles & 2 & 6\end{array}\end{array}$$ a

-Refer to the above table.Assuming that opportunity costs are constant,which of the following is a correct statement?

A)The United States has a comparative advantage in computers.
B)The United States has a comparative advantage in bicycles.
C)Mexico has a comparative advantage in computers.
D)Mexico has a comparative advantage in both goods.

Question 75

In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour.

A)Jane has a comparative advantage over Jim in both soldering and inspecting.
B)Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting.
C)Jim has a comparative advantage over Jane in soldering while Jane has a comparative advantage in inspecting.
D)Jim had a comparative advantage over Jane in both soldering and inspecting.

Question 76

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Mexico \\\hline Computers & 8 & 10 \\Bicycles & 4 & 2\end{array}\end{array}$$

-Refer to the above table.Assuming constant opportunity costs,the opportunity cost of producing a computer in the United States is ________ while the opportunity cost of producing a computer in Mexico is ________.

A)0.8 bicycle; 2 computers
B)2.5 computers; 0.25 bicycle
C)0.5 bicycle; 0.2 bicycle
D)2 bicycles; 5 bicycles

Question 77

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {l ll } Product & United States & Mexico \\\hline Computers & 8 & 3 \\Bicycles & 2 & 6\end{array}\end{array}$$ a

-Refer to the above table.Assuming that opportunity costs are constant,the opportunity cost of producing a bicycle in the United States is equal to ________,and the opportunity cost of producing a bicycle in Mexico is ________.

A)4 computers; 0.5 computer
B)0.25 computer; 2 computers
C)2.67 bicycles; 0.33 computers
D)0.375 computer; 3 bicycles

Question 78

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
$\begin{array}{l}\begin{array}{lll}\text { Product }&\text {Country } X& \text { Country } Y\\\text { A } & 4 & 8 \\\text { B } & 4 & 4\end{array}\end{array}$

-Refer to the above table.Assuming constant opportunity costs,

A)Country X has a comparative advantage in the production of both goods.
B)Country Y has a comparative advantage in the production of both goods.
C)Country X has a comparative advantage in the production of Product A while Country Y has a comparative advantage in the production of Product B.
D)Country Y has a comparative advantage in the production of Product A while Country X has a comparative advantage in the production of Product B.

Question 79

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {lll } Product & United States & Mexico \\\hline Computers & 8 & 10 \\Bicycles & 4 & 2\end{array}\end{array}$$

-Refer to the above table.It may be concluded that

A)The United States will exports computers and import bicycles.
B)Mexico will exports computers and import bicycles.
C)The United States will export both goods.
D)The United States will import both goods.

Question 80

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}\begin{array} {l ll } Product & United States & Mexico \\\hline Computers & 8 & 3 \\Bicycles & 2 & 6\end{array}\end{array}$$ a

-Refer to the above table.If opportunity costs are constant,the two countries will gain from trade at a rate of exchange of

A)0.1 computer for 1 bicycle
B)5 computers for 1 bicycle
C)1 computer for 1 bicycle
D)8 bicycles for 1 computer