Question 1

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest between:

Accepted Answer

A)   points A and B.
B)   points B and C.
C)   points C and D.
D)   points A and D.E) A) and B)
F) All of the above

Question 2

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. Which of the following statements is true?

Accepted Answer

A)   Bangladesh should specialize in glove production because it has a comparative advantage at producing gloves.
B)   Bangladesh should specialize in radish production because it has a comparative advantage at producing radishes.
C)   Bangladesh should produce both gloves and radishes because it has an absolute advantage at producing both goods.
D)   Bangladesh should produce only radishes because it has an absolute advantage at producing radishes.E) All of the above
F) A) and D)

Question 3

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country B has a(n)  _____ advantage at producing iPads, which means it should specialize in _____.

Accepted Answer

A)   comparative; iPads
B)   absolute; iPads
C)   comparative; iPhones
D)   absolute; iPhonesE) C) and D)
F) A) and B)

Question 4

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:

Accepted Answer

A)   3/20 watermelons.
B)   1/20 watermelons.
C)   1/40 watermelons.
D)   1/30 watermelons.E) A) and C)
F) C) and D)

Question 5

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. After looking at the production possibilities for both Tom and Jerry, what can we surmise?

Accepted Answer

A)   Tom has an absolute advantage at producing both chairs and tables.
B)   Jerry has an absolute advantage at producing both chairs and tables.
C)   Tom has an absolute advantage at producing chairs and Jerry has an absolute advantage at producing tables.
D)   Tom has an absolute advantage at producing tables and Jerry has an absolute advantage at producing chairs.E) A) and B)
F) All of the above

Question 6

Hurricane Katrina destroyed much of New Orleans and other parts of the South. Which of the following statements is true? The hurricane:

Accepted Answer

A)   caused the U.S. production possibilities frontier to shift inward.
B)   caused production possibilities to increase, since much work was needed to rebuild the city.
C)   caused the U.S. production possibilities frontier to bow inward.
D)   moved production from a point on the frontier to a point inside the frontier.E) A) and B)
F) None of the above

Question 7

The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage at producing apple pie, then:

Accepted Answer

A)   Canada must have a comparative advantage at producing skates.
B)   Canada must have an absolute advantage at producing skates.
C)   Canada must have an absolute and a comparative advantage at producing skates.
D)   the United States must also have a comparative advantage at producing skates.E) B) and D)
F) None of the above

Question 8

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf between points C and D is:

Accepted Answer

A)   1 sweater.
B)   20 sweaters.
C)   10 sweaters
D)   2 sweaters.E) C) and D)
F) B) and C)

Question 9

Suppose an American worker can make 100 nets or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 nets or catch 400 fish per day. The United States has an absolute advantage at producing both fish and nets. This means that the United States:

Accepted Answer

A)   should produce only nets and trade with Chile to get fish.
B)   should produce only fish and trade with Chile to get nets.
C)   should take advantage of Chile by trading with them.
D)   same amount of workers" to read "same number of workers.E) B) and D)
F) A) and B)

Question 10

If Spain is capable of producing tapas, soccer balls, or some combination of those two, then it should:

Accepted Answer

A)   produce the good it has an absolute advantage at producing.
B)   produce the good it has a comparative advantage at producing.
C)   remain self-sufficient, as long as it can produce both efficiently.
D)   trade only if it has an absolute advantage at producing both goods.E) A) and C)
F) C) and D)

Question 11

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. When trade opens up, the United States should produce _____ because it has a(n)  _____ and should _____.

Accepted Answer

A)   both goods; absolute advantage in both goods; not trade
B)   only shoes; comparative advantage at producing shoes; trade for apples.
C)   only apples; comparative advantage at producing apples; not trade
D)   only apples; comparative advantage at producing apples; trade for shoes.E) None of the above
F) A) and B)

Question 12

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

Accepted Answer

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

Question 13

When a producer has an absolute advantage at producing a good, it means the producer:

Accepted Answer

A)   can produce more of that good than others with the same amount of resources.
B)   has the ability to produce a good or service at a lower opportunity cost than others.
C)   has no reason to trade with others.
D)   is less efficient than other producers.E) A) and D)
F) B) and D)

Question 14

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

Accepted Answer

A)   (500 iPhones, 100 iPads) .
B)   (500 iPhones, 150 iPads) .
C)   (500 iPhones, 200 iPads) .
D)   (500 iPhones, 250 iPads) .E) None of the above
F) All of the above

Question 15

Consider the production possibilities frontier displayed in the figure shown. A society with this frontier should choose to produce:

Accepted Answer

A)   at point C, because it is the safest.
B)   at point B, because this is the most the society can produce.
C)   at any point that produces some of each good.
D)   at any point on the frontier rather than inside it.E) None of the above
F) A) and D)

Question 16

A country completely specializes in production when it spends all of its resources producing

Accepted Answer

A)   a particular good.
B)   the goods it has an absolute advantage at producing.
C)   only what other countries need.
D)   the goods it can make more of.E) None of the above
F) A) and D)

Question 17

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country A specializes in bananas and Country B specializes in tomatoes. Regarding the terms of trade, Country B will accept no _____ than _____ for every _____.

Accepted Answer

A)   more; 3 bananas; one tomato
B)   less; 3 bananas; one tomato
C)   more; 1 tomato; 3 bananas
D)   less; 1 tomato; 3 bananasE) C) and D)
F) B) and D)

Question 18

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) B) and C)
F) None of the above

Question 19

If the United States, a wealthy nation, trades with Cambodia, a poorer, less developed nation, which of the following statements is likely true?

Accepted Answer

A)   The United States is taking advantage of Cambodia and is the only beneficiary to the trade.
B)   Cambodia has been pressured to enter trade and is not benefiting at all.
C)   Both the United States and Cambodia can benefit from trading.
D)   The United States is being charitable and not benefiting from the trade at all.E) All of the above
F) C) and D)

Question 20

Which of the following is a reason people might choose not to specialize?

Accepted Answer

A)   Specialization can lead people to consume more than if they would if they were self-sufficient.
B)   Specialization can lead people to consume beyond the production possibilities frontier.
C)   Specialization allows people to acquire goods at a lower opportunity cost.
D)   Production standards are harder to control if goods are imported from other countries.E) None of the above
F) C) and D)

Exam 2: Specializationand Exchange

Which of the following is a reason people might choose not to specialize?

Correct Answer
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Hurricane Katrina destroyed much of New Orleans and other parts of the South. Which of the following statements is true? The hurricane:

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:

Correct Answer
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Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country A would be using resources efficiently if it was producing:

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

Correct Answer
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Correct Answer
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Correct Answer
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If the United States, a wealthy nation, trades with Cambodia, a poorer, less developed nation, which of the following statements is likely true?

Correct Answer
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Suppose an American worker can make 100 nets or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 nets or catch 400 fish per day. The United States has an absolute advantage at producing both fish and nets. This means that the United States:

Correct Answer
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A country completely specializes in production when it spends all of its resources producing

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

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest between:

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf between points C and D is:

Correct Answer
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The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage at producing apple pie, then:

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. A society with this frontier should choose to produce:

Correct Answer
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When a producer has an absolute advantage at producing a good, it means the producer:

Correct Answer
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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. Which of the following statements is true?

Correct Answer
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If Spain is capable of producing tapas, soccer balls, or some combination of those two, then it should:

Correct Answer
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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. When trade opens up, the United States should produce ___ because it has a(n) _ and should ___.

Correct Answer
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Exam 2: Specializationand Exchange

Which of the following is a reason people might choose not to specialize?

Correct AnswerverifiedShow Answer

Hurricane Katrina destroyed much of New Orleans and other parts of the South. Which of the following statements is true? The hurricane:

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 frontier, it is clear that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the United States, a wealthy nation, trades with Cambodia, a poorer, less developed nation, which of the following statements is likely true?

Correct AnswerverifiedShow Answer

Suppose an American worker can make 100 nets or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 nets or catch 400 fish per day. The United States has an absolute advantage at producing both fish and nets. This means that the United States:

Correct AnswerverifiedShow Answer

A country completely specializes in production when it spends all of its resources producing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest between:

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf between points C and D is:

Correct AnswerverifiedShow Answer

The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage at producing apple pie, then:

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. A society with this frontier should choose to produce:

Correct AnswerverifiedShow Answer

When a producer has an absolute advantage at producing a good, it means the producer:

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. Which of the following statements is true?

Correct AnswerverifiedShow Answer

If Spain is capable of producing tapas, soccer balls, or some combination of those two, then it should:

Correct AnswerverifiedShow Answer

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. When trade opens up, the United States should produce _____ because it has a(n) _____ and should _____.

Correct AnswerverifiedShow Answer

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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. When trade opens up, the United States should produce ___ because it has a(n) _ and should ___.

Correct Answer
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