Question 1

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 D)
F) B) and C)

Question 2

A country's newest ruler has decided the country will become self-sufficient and ceases trade with the rest of the world. The likely outcome of this action will be that the country's citizens will be:

Accepted Answer

A)   forced to consume less than before if they possessed a comparative advantage in the production of a good.
B)   better off than before if they possess an absolute advantage in the production of a good.
C)   better off than before only if they have the absolute advantage in the production of most goods they consume.
D)   better off than before only if they have the comparative advantage in all goodsE) All of the above
F) B) and C)

Question 3

When two countries specialize and trade with one another total production:

Accepted Answer

A)   remains unchanged but consumption rises.
B)   increases, but only if comparative advantage exists.
C)   may increase, depending on trade relations.
D)   and consumption remain unchanged.E) All of the above
F) A) and C)

Question 4

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. A bundle of goods that Country B could not make would be:

Accepted Answer

A)   (400 iPods, 250 tablets) .
B)   (300 iPods, 500 tablets) .
C)   (200 iPods, 750 tablets) .
D)   (100 iPods, 1,000 tablets) .E) C) and D)
F) A) and B)

Question 5

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage in:

Accepted Answer

A)   the production of bananas, but not tomatoes.
B)   the production of both bananas and tomatoes.
C)   the production of tomatoes, but not bananas.
D)   neither good.E) All of the above
F) C) and D)

Question 6

Suppose that, given the same number of workers, the United States can produce five times as many computers or 10 times as many airplanes as Mexico. Which of the following statements is true?

Accepted Answer

A)   The United States has an absolute advantage in the production of computers, and Mexico has an absolute advantage in the production of airplanes.
B)   The United States has an absolute advantage in the production of airplanes, and Mexico has an absolute advantage in the production of computers.
C)   The United States has an absolute advantage in the production of both airplanes and computers.
D)   Mexico has an absolute advantage in the production of both airplanes and computers.E) All of the above
F) A) and B)

Question 7

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. At the end of the day, if Jerry was efficient with his resources, he could have produced:

Accepted Answer

A)   12 dishes and 0 fences.
B)   10 dishes and 2 fences.
C)   8 dishes and 2 fences.
D)   6 dishes and 2 fences.E) None of the above
F) All of the above

Question 8

If society were to experience an increase in its available resources its production possibilities frontier would:

Accepted Answer

A)   shift out.
B)   shift in.
C)   not move.
D)   become convex.E) B) and C)
F) B) and D)

Question 9

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 B would be using resources efficiently if they were producing:

Accepted Answer

A)   (200 iPods, 1,750 tablets) .
B)   (200 iPods, 1,500 tablets) .
C)   (200 iPods, 1,000 tablets) .
D)   (200 iPods, 750 tablets) .E) A) and B)
F) B) and C)

Question 10

If we consider the reality that each worker has different skills, then the production possibilities frontier would:

Accepted Answer

A)   have a convex shape.
B)   have a concave shape.
C)   be a straight line.
D)   shift outward.E) A) and B)
F) C) and D)

Question 11

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) A) and C)
F) A) and B)

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) A) and B)
F) A) and C)

Question 13

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 B)
F) A) and C)

Question 14

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) None of the above
F) All of the above

Question 15

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

Accepted Answer

A)   should produce only chairs and trade with Chile to get fish.
B)   should produce only fish and trade with Chile to get chairs.
C)   should take advantage of Chile by trading with them.
D)   can produce more fish and chairs than Chile given the same amount of workers.E) A) and C)
F) B) and C)

Question 16

Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?

Accepted Answer

A)   The United States has the comparative advantage in chair production.
B)   Chile has the comparative advantage in chair production.
C)   Both the United States and Chile have a comparative advantage in chair production.
D)   Neither the United States nor Chile has a comparative advantage in chair production.E) A) and B)
F) A) and C)

Question 17

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Considering both country's production possibilities frontiers, we can infer that Country A will specialize in:

Accepted Answer

A)   trucks, and be willing to accept no less than 5 cars for each truck.
B)   cars, and be willing to give no more than 5 cars for each truck.
C)   trucks, and be willing to accept no more than 5 cars for each truck.
D)   cars, and be willing to give no less than 5 cars for each truck.E) None of the above
F) A) and B)

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) B) and D)

Question 19

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 for Canada is:

Accepted Answer

A)   2 apples for each pair of shoes.
B)   2 pairs of shoes for each apple.
C)   ½ apple for each pair of shoes.
D)   ½ pair of shoes for every 2 apples.E) B) and C)
F) A) and B)

Question 20

3 to PPF1? A)  A tornado B)  More workers C)  A desire to read lessbooks D)  Better sewing technology" class="answers-bank-image d-inline" rel="preload" > Consider a society facing the production possibilities curves in the figure shown. What is the most likely cause of a society moving from PPF3 to PPF1?

Accepted Answer

A)   A tornado
B)   More workers
C)   A desire to read lessbooks
D)   Better sewing technologyE) A) and D)
F) None of the above

Exam 2: Specialization and Exchange

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 B would be using resources efficiently if they were producing:

Correct Answer
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If society were to experience an increase in its available resources its production possibilities frontier would:

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

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

Correct Answer
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Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage in:

Correct Answer
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Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?

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

Correct Answer
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When two countries specialize and trade with one another total production:

Correct Answer
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If we consider the reality that each worker has different skills, then the production possibilities frontier would:

Correct Answer
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Suppose that, given the same number of workers, the United States can produce five times as many computers or 10 times as many airplanes as Mexico. Which of the following statements is true?

Correct Answer
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A country's newest ruler has decided the country will become self-sufficient and ceases trade with the rest of the world. The likely outcome of this action will be that the country's citizens will be:

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. The opportunity cost for Canada is:

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

Correct Answer
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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Considering both country's production possibilities frontiers, we can infer that Country A will specialize in:

Correct Answer
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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
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Two countries will choose to specialize and trade only if:

Correct Answer
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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. A bundle of goods that Country B could not make would be:

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. The opportunity cost of one pair of gloves is:

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

Correct Answer
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Correct Answer
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Exam 2: Specialization and Exchange

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 B would be using resources efficiently if they were producing:

Correct AnswerverifiedShow Answer

If society were to experience an increase in its available resources its production possibilities frontier would:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage in:

Correct AnswerverifiedShow Answer

Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When two countries specialize and trade with one another total production:

Correct AnswerverifiedShow Answer

If we consider the reality that each worker has different skills, then the production possibilities frontier would:

Correct AnswerverifiedShow Answer

Suppose that, given the same number of workers, the United States can produce five times as many computers or 10 times as many airplanes as Mexico. Which of the following statements is true?

Correct AnswerverifiedShow Answer

A country's newest ruler has decided the country will become self-sufficient and ceases trade with the rest of the world. The likely outcome of this action will be that the country's citizens will be:

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. The opportunity cost for Canada is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Considering both country's production possibilities frontiers, we can infer that Country A will specialize in:

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

Two countries will choose to specialize and trade only if:

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. A bundle of goods that Country B could not make would be:

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

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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