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Exam 2: Specialization and Exchange

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Question 51

Multiple Choice

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

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

E) C) and D)
F) A) and B)

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Question 52

Multiple Choice

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

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

E) None of the above
F) C) and D)

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Question 53

Multiple Choice

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The concepts of comparative advantage, specialization, and trade:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B After examining the production possibilities of each country, we can surmise that Country A's opportunity cost of a car:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Considering both country's production possibilities frontiers, we know that would both agree to terms of trade of one truck to:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B One of the reasons why Country A and Country B are not realistic representations of actual countries is:

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.

If a country possesses the absolute advantage in the production of one good:

People would not choose to specialize because:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Country A has the comparative advantage in:

When a producer has a comparative advantage in producing a good, it means the producer:

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

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. For a worker in Country B, the trade-off to making one tomato is:

Consider a society facing the production possibilities curves in the figure shown. What is the most likely cause of a society moving from PPF₁ to PPF₃?

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The slope of Country A's production possibilities frontier:

Consider a society facing the production possibilities curves in the figure shown. What is the most likely cause of a society moving from PPF₁ to PPF₂?

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

Suppose 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. Using the concepts of absolute and comparative advantage, we can say that the United States has the comparative advantage in:

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. Suppose Country A specializes in bananas, and Country B specializes in tomatoes. The limits to the terms of trade that Country B would find acceptable are Country B will accept no:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Country A would be using resources efficiently if it produced: