Question 1

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.After examining each country's production possibilities curve,it is clear that:

Accepted Answer

A)  neither country will benefit from trade.
B)  both countries can benefit from trade because absolute advantage exists.
C)  both countries could benefit from trade because comparative advantage exists.
D)  only Country A will benefit from trade.E) A) and B)
F) C) and D)

Question 2

The invisible hand refers to the coordination that occurs from:

Accepted Answer

A)   everyone working in his or her own self-interest.
B)   a government agency finding efficiencies.
C)   everyone working for the overall good of society.
D)   a government coordinating economic activity.E) A) and C)
F) None of the above

Question 3

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

Accepted Answer

A)   (7,200 bananas, 2,400 tomatoes)  and (3,600 bananas, 1,200 tomatoes) 
B)   (7,200 bananas, 0 tomatoes)  and (4,000 bananas, 1,200 tomatoes) 
C)   (3,600 bananas, 1,200 tomatoes)  and (1,800 bananas, 1,600 tomatoes) 
D)   (1,800 bananas, 1,800 tomatoes)  and (900 bananas, 2,200 tomatoes) E) None of the above
F) A) and B)

Question 4

Tom and Jerry have two tasks to do all day: make dishes and build fences.If Tom spends all day making dishes,he will have make 16 dishes.If he instead devotes his day to building fences,Tom will build 4 fences.If Jerry spends his day making dishes,he will make 14 dishes; if he spends the day building fences,he will build 7 fences.The opportunity cost of one fence is _______ for Tom and ________ for Jerry.Therefore Tom should specialize in ______________.

Accepted Answer

A)   4 dishes; 2 dishes; dishes
B)   16 dishes; 14 dishes; dishes
C)   4 dishes; 2 dishes; fences
D)   16 dishes; 14 dishes; fencesE) None of the above
F) C) and D)

Question 5

Consider the production possibilities frontier in the figure shown.The opportunity cost of moving from point A to point B is:

Accepted Answer

A)   5 cars per cigar.
B)   10 cars per cigar.
C)   5 cigars per car.
D)   10 cigars per car.E) A) and B)
F) A) and C)

Question 6

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.On the other hand,a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day.The opportunity cost of one pair of gloves is:

Accepted Answer

A)   6 radishes for the United States and 2 radishes for Bangladesh.
B)   60 radishes for the United States and 20 radishes for Bangladesh.
C)   1/6 radishes for the United States and Â½ radishes for Bangladesh.
D)   6,000 radishes for the United States and 2,000 radishes for Bangladesh.E) C) and D)
F) A) and C)

Question 7

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.On the other hand,a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day.The opportunity cost of a pair of shoes is __________ for the United States than Canada,so Canada has the ______________ advantage in shoe production.

Accepted Answer

A)   higher; comparative
B)   lower; comparative
C)   higher; absolute
D)   lower; absoluteE) None of the above
F) A) and B)

Question 8

The concept of the invisible hand was first introduced to economics by:

Accepted Answer

A)   David Ricardo.
B)   Adam Smith.
C)   Thomas Malthus.
D)   Milton Friedman.E) A) and C)
F) None of the above

Question 9

Consider the production possibilities frontier displayed in the figure shown.The fact that the line slopes downward displays which economic concept?

Accepted Answer

A)   Production possibilities
B)   Trade-offs
C)   Specialization
D)   EfficiencyE) B) and D)
F) C) and D)

Question 10

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.Which of the following statements can be said of Country A? Country A:

Accepted Answer

A)  has the comparative advantage in car production only.
B)  has the comparative advantage in truck production only.
C)  has the comparative advantage in car and truck production.
D)  does not possess the comparative advantage in either good.E) All of the above
F) B) and C)

Question 11

Tom and Jerry have two tasks to do all day: make dishes and build fences.If Tom spends all day making dishes,he will have make 16 dishes.If he instead devotes his day to building fences,Tom will build 4 fences.If Jerry spends his day making dishes,he will make 14 dishes; if he spends the day building fences,he will build 7 fences.After looking at the production possibilities for both Tom and Jerry,we can conclude that:

Accepted Answer

A)   Tom has the comparative advantage in dish production.
B)   Jerry has the comparative advantage in dish production.
C)   Tom has the comparative advantage in fence production.
D)   No comparative advantage exists.E) A) and C)
F) A) and D)

Question 12

What determines a country's limits to acceptable terms of trade?

Accepted Answer

A)   Their opportunity costs in production.
B)   Whether they possess the absolute advantage in the production of a good.
C)   How much a country likes a good for which they are trading.
D)   When a country has a comparative advantage in production of both goods.E) B) and C)
F) A) and C)

Question 13

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

Accepted Answer

A)   iPods only.
B)   tablets only.
C)   both iPods and tablets.
D)   neither iPods nor tablets.E) B) and C)
F) All of the above

Question 14

Consider the production possibilities frontier displayed in the figure shown.Which of the following statements is true?

Accepted Answer

A)   Producing at point D would be inefficient.
B)   Producing at point C would be inefficient.
C)   Producing at point B would be inefficient.
D)   Producing at point A would be inefficient.E) B) and D)
F) A) and B)

Question 15

Tom and Jerry have two tasks to do all day: make dishes and build fences.If Tom spends all day making dishes,he will have make 16 dishes.If he instead devotes his day to building fences,Tom will build 4 fences.If Jerry spends his day making dishes,he will make 14 dishes; if he spends the day building fences,he will build 7 fences.For Tom,the opportunity cost of building a fence is __________ dishes made.

Accepted Answer

A)   16
B)   12
C)   8
D)   4E) None of the above
F) C) and D)

Question 16

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Accepted Answer

A)   has an absolute advantage at producing that good.
B)   has a comparative advantage at producing that good.
C)   has no reason to trade with others.
D)   is efficient in production.E) None of the above
F) C) and D)

Question 17

Two countries will choose to specialize and trade only if:

Accepted Answer

A)   the terms of trade fall between their opportunity costs for producing the goods on their own.
B)   the opportunity costs are the same for the two nations.
C)   the opportunity costs are astronomically high for producing the goods on their own.
D)   one country possesses the absolute advantage in both goods, but the comparative advantage in only one good.E) A) and B)
F) All of the above

Question 18

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The workers in Country B will benefit from trade if they:

Accepted Answer

A)   specialize in bananas because they have a comparative advantage in banana production.
B)   specialize in tomatoes because their opportunity cost of tomatoes is higher than Country A's.
C)   specialize in tomatoes because their opportunity cost of tomatoes is lower than Country A's.
D)   specialize in bananas because they have an absolute advantage in banana production.E) A) and D)
F) C) and D)

Question 19

Which of the following statements about absolute and comparative advantage is not true? A country may have:

Accepted Answer

A)   a comparative advantage but not an absolute advantage in the production of a good.
B)   an absolute advantage but not a comparative advantage in the production of a good
C)   the absolute advantage in the production of all goods.
D)   neither absolute nor comparative advantage in the production of any goods.E) A) and B)
F) B) and C)

Exam 2: Specialization and Exchange

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.Which of the following statements can be said of Country A? Country A:

Correct Answer
verified

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Correct Answer
verified

Correct Answer
verified

Consider the production possibilities frontier displayed in the figure shown.Which of the following statements is true?

Correct Answer
verified

Consider the production possibilities frontier in the figure shown.The opportunity cost of moving from point A to point B is:

Correct Answer
verified

Consider the production possibilities frontier displayed in the figure shown.The fact that the line slopes downward displays which economic concept?

Correct Answer
verified

Correct Answer
verified

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.On the other hand,a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day.The opportunity cost of one pair of gloves is:

Correct Answer
verified

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

Correct Answer
verified

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The workers in Country B will benefit from trade if they:

Correct Answer
verified

The invisible hand refers to the coordination that occurs from:

Correct Answer
verified

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

Correct Answer
verified

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.After examining each country's production possibilities curve,it is clear that:

Correct Answer
verified

Correct Answer
verified

What determines a country's limits to acceptable terms of trade?

Correct Answer
verified

Correct Answer
verified

The concept of the invisible hand was first introduced to economics by:

Correct Answer
verified

Two countries will choose to specialize and trade only if:

Correct Answer
verified

Which of the following statements about absolute and comparative advantage is not true? A country may have:

Correct Answer
verified

Exam 2: Specialization and Exchange

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.Which of the following statements can be said of Country A? Country A:

Correct AnswerverifiedShow Answer

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier in the figure shown.The opportunity cost of moving from point A to point B is:

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown.The fact that the line slopes downward displays which economic concept?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.On the other hand,a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day.The opportunity cost of one pair of gloves is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The workers in Country B will benefit from trade if they:

Correct AnswerverifiedShow Answer

The invisible hand refers to the coordination that occurs from:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the figure shown,which represents the production possibilities frontiers for Countries A and B.After examining each country's production possibilities curve,it is clear that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What determines a country's limits to acceptable terms of trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The concept of the invisible hand was first introduced to economics by:

Correct AnswerverifiedShow Answer

Two countries will choose to specialize and trade only if:

Correct AnswerverifiedShow Answer

Which of the following statements about absolute and comparative advantage is not true? A country may have:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified