Question 1

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

Accepted Answer

A)  Greece will specialize in and export fish.
B)  Some individuals in each country will be hurt.
C)  More of each good can be consumed in both countries.
D)  Greece will benefit from trade more than Germany.E) B) and D)
F) B) and C)

Question 2

Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Accepted Answer

A)  1/5 table for Mike and 1/3 table for Sandy.
B)  5 tables for Mike and 3 tables for Sandy.
C)  1/3 table for Mike and 1/5 table for Sandy.
D)  3 tables for Mike and 5 tables for Sandy.E) C) and D)
F) B) and D)

Question 3

Table 3-3
 
-Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Accepted Answer

A)  5 quilts.
B)  1 quilt.
C)  1/5 quilt.
D)  4 quilts.E) A) and D)
F) All of the above

Question 4

On what is comparative advantage based?

Accepted Answer

A)  capital costs.
B)  labour costs.
C)  dollar price.
D)  opportunity costs.E) A) and B)
F) C) and D)

Question 5

Table 3-2
 
-Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Accepted Answer

A)  4 hours of labour.
B)  5 hours of labour.
C)  5/4 kilograms of potatoes.
D)  4/5 kilogram of potatoes.E) A) and C)
F) C) and D)

Question 6

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Accepted Answer

A)  Each person's production possibilities frontier will shift outward.
B)  Total production in the economy will increase.
C)  Everyone can be better off with specialization and trade.
D)  The size of the economic pie will increase.E) A) and B)
F) B) and D)

Question 7

Figure 3-4  
-Refer to Figure 3-4. Which of the following is correct?

Accepted Answer

A)  Ben has a comparative advantage in beer, and Jerry has a comparative advantage in wine.
B)  Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer.
C)  Ben has a comparative advantage in neither good, and Jerry has a comparative advantage in wine.
D)  Ben has a comparative advantage in both goods, and Jerry has a comparative advantage in neither.E) None of the above
F) All of the above

Question 8

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Accepted Answer

A) True 
 B)False

Question 9

Table 3-6
 
-Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Accepted Answer

A)  4 breads.
B)  2 breads.
C)  1/2 bread.
D)  1/4 bread.E) A) and B)
F) B) and D)

Question 10

Table 3-5
 
-Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Accepted Answer

A)  4 cars.
B)  3 cars.
C)  1/3 car.
D)  1/4 car.E) A) and D)
F) A) and B)

Question 11

Table 3-5
 
-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

Accepted Answer

A)  Canada will export cars and Japan will export airplanes.
B)  Canada will export airplanes and Japan will export cars.
C)  Canada will export cars and Japan will export cars.
D)  Canada will export airplanes and Japan will export airplanes.E) A) and B)
F) A) and C)

Question 12

Which of the following is correct regarding David Ricardo?

Accepted Answer

A)  He wrote books opposing the ideas of Adam Smith.
B)  He was the founder of modern economics.
C)  He argued in favour of Britain following a free-trade policy.
D)  He wrote An Inquiry into the Nature and Causes of the Wealth of Nations.E) C) and D)
F) B) and C)

Question 13

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Accepted Answer

Absolute advantage refers to productivit...

Question 14

Which book did David Ricardo write?

Accepted Answer

A)  Inquiry into the Nature and Causes of the Wealth of Nations.
B)  Principles of Political Economy and Taxation.
C)  The General Theory of Prices and Employment.
D)  Why Nations Trade.E) All of the above
F) A) and D)

Question 15

Suppose it takes a Chinese worker 2 hours to produce a ceramic pot, and 20 hours to produce a tablecloth. Suppose that it takes a Canadian worker 2 hours to produce a ceramic pot and 10 hours to produce a tablecloth. It will pay China to produce extra pots and export them to Canada in return for imported Canadian tablecloths.

Accepted Answer

A) True 
 B)False

Question 16

Table 3-5
 
-Refer to Table 3-5. Which of the following is correct?

Accepted Answer

A)  Canada has an absolute advantage in airplanes and Japan has an absolute advantage in cars.
B)  Canada has an absolute advantage in neither good and Japan has an absolute advantage in both goods.
C)  Canada has an absolute advantage in cars and Japan has an absolute advantage in airplanes.
D)  Canada has an absolute advantage in neither good and Japan has an absolute advantage in cars.E) C) and D)
F) None of the above

Question 17

Table 3-6
 
-Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Accepted Answer

A)  2 breads.
B)  1 bread.
C)  1/2 bread.
D)  1/4 bread.E) B) and C)
F) None of the above

Question 18

Table 3-5
 
-Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Accepted Answer

A)  4 airplanes.
B)  3 airplanes.
C)  1/3 airplane.
D)  1/4 airplane.E) None of the above
F) All of the above

Question 19

Some countries win in international trade, while other countries lose.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good for which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, what is each country's maximum consumption of new radios and televisions per year?

Accepted Answer

A)  300 televisions and 100 radios in Radioland and 300 radios and 100 televisions in Teeveeland.
B)  300 televisions and 100 radios in Teeveeland and 300 radios and 100 televisions in Radioland.
C)  100 televisions and 200 radios in Radioland and 100 radios and 200 televisions in Teeveeland.
D)  400 televisions and 100 radios in Teeveeland and 400 radios and 100 televisions in Radioland.E) B) and C)
F) None of the above

Exam 3: Interdependence and the Gains From Trade

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Correct Answer
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Table 3-2 -Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Correct Answer
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Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Correct Answer
verified
Absolute advantage refers to productivit...
View Answer

Table 3-5 -Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

Correct Answer
verified

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Correct Answer
verified

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

Correct Answer
verified

Table 3-3 -Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Correct Answer
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Some countries win in international trade, while other countries lose.

Correct Answer
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Correct Answer
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Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Correct Answer
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Figure 3-4 -Refer to Figure 3-4. Which of the following is correct?

Correct Answer
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Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Correct Answer
verified

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Correct Answer
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Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Correct Answer
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On what is comparative advantage based?

Correct Answer
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Which book did David Ricardo write?

Correct Answer
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Which of the following is correct regarding David Ricardo?

Correct Answer
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Correct Answer
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Table 3-5 -Refer to Table 3-5. Which of the following is correct?

Correct Answer
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Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 airplane for Canada?

Correct AnswerverifiedShow Answer

Table 3-2 -Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher?

Correct AnswerverifiedShow Answer

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns and why?

Correct AnswerverifiedAbsolute advantage refers to productivit...View AnswerShow Answer

Table 3-5 -Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?

Correct AnswerverifiedShow Answer

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Correct AnswerverifiedShow Answer

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, which of the following would NOT be true?

Correct AnswerverifiedShow Answer

Table 3-3 -Refer to Table 3-3. What is the opportunity cost of 1 dress for Carolyn?

Correct AnswerverifiedShow Answer

Some countries win in international trade, while other countries lose.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 car for Canada?

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. Which of the following is correct?

Correct AnswerverifiedShow Answer

Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What is the opportunity cost of 1 chair?

Correct AnswerverifiedShow Answer

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in England?

Correct AnswerverifiedShow Answer

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Correct AnswerverifiedShow Answer

On what is comparative advantage based?

Correct AnswerverifiedShow Answer

Which book did David Ricardo write?

Correct AnswerverifiedShow Answer

Which of the following is correct regarding David Ricardo?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 3-5 -Refer to Table 3-5. Which of the following is correct?

Correct AnswerverifiedShow Answer

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of cheese in Spain?

Correct AnswerverifiedShow Answer

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Correct Answer
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Absolute advantage refers to productivit...
View Answer

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