MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Theinvisiblehandrefersto:
A) thecoordinationthatoccursfromagovernmentagencyfindingefficiencies.
B) thecoordinationthatoccursfromeveryoneworkinginhisorherownself-interest.
C) thecoordinationthatoccursfromagovernmentcoordinatingeconomicactivity.
D) thecoordinationthatoccursfromeveryoneworkingfortheoverallgoodofsociety.
Answer: B
2) Theconceptsofspecializationandgainsfromtradeexplain:
A) internationaltrade.
B) bothinternationaltradeandthechoicesindividualsmake.
C) whyglobalizationhasexpandedrecently.
D) consumerdecisions.
Answer: B
3) Theconceptoftheinvisiblehandwasfirstintroducedtoeconomicsby:
A) AdamSmith.
C) MiltonFriedman.
Answer: A
B) ThomasMalthus.
D) DavidRicardo.
4) Aproductionpossibilitiesfrontierisalineorcurvethat:
A) showswhatcanbeproducedwhenallavailableresourcesarenotefficientlyused.
B) showsallthepossiblecombinationsofoutputsthatcanbeproducedusingallavailable resources.
C) explainswhysocietiesmakethechoicestheydo.
D) showsthebestcombinationsofoutputsthatcanbeproducedusingallavailableresources.
Answer: B
5) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Thefactthatthelineslopes downwarddisplayswhicheconomicconcept?
A) Productionpossibilities
C) Trade-offs
Answer: C
B) Specialization
D) Efficiency
6) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Asocietyfacedwiththiscurve couldchoosetoproduce:
Answer:
7) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichpointsareefficientand attainablewithexistingresources?
A) PointsAandD.
C) OnlypointB.
Answer: A
B) OnlypointA.
D) PointsA,C,andD.
8) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Asocietyfacedwiththiscurve:
A) canonlyobtainpointDorpointA.
C) cannotobtainpointC.
Answer: D
B) canonlyobtainpointC.
D) cannotobtainpointB.
9) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichofthefollowingstatements istrue?
A) ProducingatpointBwouldbeinefficient. B) ProducingatpointCwouldbeinefficient.
C) ProducingatpointAwouldbeinefficient. D) ProducingatpointDwouldbeinefficient.
Answer: B
10) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichofthefollowingstatements istrue?
A) ProducingatpointBisimpossible.
B) ProducingatpointCisthebestchoice,becauseit'sclosesttothemiddle.
C) ProducingatpointAisthebestchoice,becausesomeofbothitemsaremade.
D) ProducingatpointDwouldbeinefficient,sincenobookswouldbeproduced.
Answer: A
11) Theslopeofaproductionpossibilitiesfrontiermeasures:
A) thetrade-offinherentintheproductionofonegoodversustheothergood.
B) howmuchofonegoodthatmustbegivenupinordertoproduceoneoftheothergood.
C) theopportunitycostofproducingonegoodintermsoftheothergood.
D) Allofthesestatementsaretrue.
Answer: D
12) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Asocietywillchoosetoproduce:
A) atpointCbecauseitisthesafest.
B) atpointAbecauseitisalwaysbesttoproducesomeofeachgood.
C) atpointDbecauseitrepresentsthemostapplesthesocietycanproduce.
D) Noneofthesestatementsarenecessarilytrue.
Answer: D
13) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Theopportunitycostofabushelof applesis:
A) 1/30watermelons.
C) 1/20watermelons.
Answer: C
B) 3/20watermelons.
D) 1/40watermelons.
14) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Theopportunitycostofone watermelonis:
A) 20bushelsofapples.
C) 40bushelsofapples.
Answer: A
B) 10bushelsofapples.
D) 30bushelsofapples.
15) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Ifthissocietychoosestoproduce 200bushelsofapples:
A) itcanproducenomorethan5watermelons.
B) itcanproducenomorethan10watermelons.
C) itcanproducenomorethan15watermelons.
D) itcanproducenomorethan20watermelons.
Answer: B
16) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichofthefollowing combinationscouldbeproduced?
A) (20watermelons,400bushelsofapples) B) (10watermelons,400bushelsofapples) C) (10watermelons,300bushelsofapples) D) (15watermelons,100bushelsofapples)
Answer: D
17) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichofthefollowing combinationscould notbeproduced?
A) (15watermelons,100bushelsofapples)
C) (20watermelons,400bushelsofapples)
Answer: C
B) (10watermelons,150bushelsofapples)
D) (0watermelons,400bushelsofapples)
18) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Ifthissocietychoosestoproduce 15watermelons:
A) itcanproducenomorethan300bushelsofapples.
B) itcanproducenomorethan400bushelsofapples.
C) itcanproducenomorethan200bushelsofapples.
D) itcanproducenomorethan100bushelsofapples.
Answer: D
19) Considertheproductionpossibilitiesfrontierdisplayedinthefigureshown.Whichofthefollowingstatements istrue?
A) Theopportunitycostofonewatermelonisconstant.
B) Theopportunitycostofonewatermelonwillincreaseasmorewatermelonsareproduced.
C) Theopportunitycostofonewatermelonwilldecreaseasmorewatermelonsareproduced.
D) TheopportunitycostofonewatermelonisverylowatpointC.
Answer: A
20) Ifweconsidertherealitythateachworkerhasdifferentskills,thentheproductionpossibilities frontier:
A) wouldhaveaconvexshape. B) wouldbeastraightline.
C) wouldhaveaconcaveshape. D) wouldshiftoutward.
Answer: C
21) Ifweconsidertherealitythateachworkerhasdifferentskills,thentheproductionpossibilities frontier:
A) woulddisplayaconstantopportunitycostofagoodasmoreofthatgoodisproduced.
B) cannotbedrawn,astoomanyvariableswouldneedtobetakenintoconsideration.
C) woulddisplayadecreasingopportunitycostofagoodasmoreofthatgoodisproduced.
D) woulddisplayanincreasingopportunitycostofagoodasmoreofthatgoodisproduced.
Answer: D
22) Arealisticproductionpossibilitiescurve:
A) isstraighterthanoneassumingconstantopportunitycosts.
B) ismoreconcavethanoneassumingincreasingopportunitycosts.
C) ismoreconcavethanoneassumingconstantopportunitycosts.
D) ismoreconvexthanoneassumingconstantopportunitycosts.
Answer: B
23) Considertheproductionpossibilitiesfrontierinthefigureshown.Asmoreandmorecarsareproduced:
A) theopportunitycostofcarsdecreases.
B) theopportunitycostofcarsstaysthesame.
C) theopportunitycostofcarsdecreasesthenincreases.
D) theopportunitycostofcarsincreases.
Answer: D
24) Considertheproductionpossibilitiesfrontierinthefigureshown.Asmoreandmorecigarsareproduced:
A) theopportunitycostofcarsdecreasesthenincreases.
B) theopportunitycostofcarsdecreases.
C) theopportunitycostofcarsstaysthesame.
D) theopportunitycostofcarsincreases.
Answer: B
25) Considertheproductionpossibilitiesfrontierinthefigureshown.TheopportunitycostofmovingfrompointA topointB:
A) is5cigarspercar.
C) is5carspercigar.
Answer: A
B) is10cigarspercar.
D) is10carspercigar.
26) Considertheproductionpossibilitiesfrontierinthefigureshown.Theopportunitycostofcarswhenmoving frompointBtopointC:
A) isgreaterthantheopportunitycostofcarswhenmovingbetweenanyothertwopoints.
B) isgreaterthantheopportunitycostofcarswhenmovingfrompointAtopointB.
C) islessthantheopportunitycostofcarswhenmovingfrompointAtopointB.
D) Noneofthesestatementsaretrue.
Answer: B
27) Choosingtoproduceatanypointwithinaproductionpossibilitiesfrontier:
A) isunobtainable,meaningthesocietycannotproducethatcombinationofgoods.
B) isefficient,meaningthesocietywouldbeusingallitsavailableresourcesintheirbestpossible uses.
C) isinefficient,meaningthesocietywouldnotbeusingallitsavailableresourcesintheirbest possibleuses.
D) isefficient,meaningthesocietywouldbeusingallitsavailableresources,thoughnotintheir bestuses.
Answer: C
28) Theproductionpossibilitiesfrontier:
A) canshowuswhichpossiblecombinationsofgoodssocietyshouldchoose,butcannottellus whichpointswillbeinefficient.
B) canshowallpossiblecombinationsofgoodsandwhichsocietyshouldchoose.
C) canshowallpossiblecombinationsofgoodsbutnottelluswhichcombinationsocietyshould choose.
D) cannotshowallpossiblecombinationsofgoodsbecausesocietyistypicallyinefficient.
Answer: C
29) Ifsocietyweretoexperienceanincreaseinitsavailableresources:
A) itsproductionpossibilitiesfrontierwouldshiftout.
B) itsproductionpossibilitiesfrontierwouldnotmove,butsocietycouldchangeitsproduction choice.
C) itsproductionpossibilitiesfrontierwouldshiftin.
D) itsproductionpossibilitiesfrontierwouldbecomeconvex.
Answer: A
30) Considerasocietyfacingtheproductionpossibilitiescurvesinthefigureshown.Whatisthemost likelycauseofasocietymovingfromPPF1toPPF2?
A) Moreworkers
C) Bettersewingtechnology
Answer: D
B) Adesiretoreadmorebooks
D) Betterprintingpresstechnology
31) Considerasocietyfacingtheproductionpossibilitiescurvesinthefigureshown.Whatisthemost likelycauseofasocietymovingfromPPF1toPPF3?
A) Adesiretoreadmorebooks
C) Bettersewingtechnology
Answer: B
B) Moreworkers
D) Betterprintingpresstechnology
32) Considerasocietyfacingtheproductionpossibilitiescurvesinthefigureshown.Whatisthemost likelycauseofasocietymovingfromPPF3toPPF1?
A) Bettersewingtechnology
C) Atornado
Answer: C
B) Adesiretoreadmorebooks
D) Moreworkers
33) Anincreaseinproductivityasaresultofanewtechnologywouldcausetheproductionpossibilities frontierto:
A) becomemoremeaningfulinpolicydecisions.
B) shiftout.
C) shiftin.
D) notmoveuntilsocietychoosestomoveit.
Answer: B
34) HurricaneKatrinadestroyedmuchofNewOrleansandotherpartsoftheSouth.Whichofthe followingstatementsistrue?
A) ThehurricanecausedNewOrleans’productionpossibilitiestoincrease,sinceitcreatedalotof worktorebuildthecityandsurroundingareas.
B) ThehurricanecausedNewOrleans’productionpossibilitiestoshiftinwards.
C) ThehurricanecausedNewOrleans’productionpossibilitiesfrontiertoshiftoutwards.
D) Noneofthesestatementsaretrue.
Answer: B
35) Trade:
A) decreasestotalproductionacrossnationsbutincreasesitforsome.
B) increasestotalproduction,whichbenefitsonlythemorewealthynation.
C) decreasestotalproductionacrossnationsbutbenefitseveryonebecausetheyareindividually moreproductive.
D) increasestotalproduction,whichcanbenefiteveryoneinvolved.
Answer: D
36) Trade:
A) onlybenefitstheweakernation.
B) onlybenefitsthestrongernation.
C) canbenefiteveryoneinvolved.
D) canonlybenefitonepartyofthetrade,butwecannotsaywhichwithoutmoreinformation.
Answer: C
37) Trade:
A) involvesawinnerandaloser. B) canbenefitbothparties.
C) isazerosumproposition. D) oftenhurtsbothpartiesinthelongrun.
Answer: B
38) IfawealthynationsuchasCanadatradeswithapoorer,lessdevelopednationlikeCambodia,then itislikelytruethat:
A) Cambodiaispressuredtoentertradeandnotbenefitingatall.
B) bothCanadaandCambodiacanbenefitfromtrading.
C) CanadaistakingadvantageofCambodiaandistheonlybeneficiarytothetrade.
D) Canadaisbeingcharitableandnotbenefitingfromthetradeatall.
Answer: B
39) Whenaproducerisactingefficiently:
A) itisproducingonlyonegood.
B) itisproducingatapointonorunderitsproductionpossibilitiesfrontier.
C) itisproducingthegoodinwhichithasanabsoluteadvantage.
D) itisproducingatapointonitsproductionpossibilitiesfrontier.
Answer: D
40) Whenacountryisactingefficiently:
A) ithasunemployedworkers.
B) itisproducingatapointonorbelowitsproductionpossibilitiesfrontier.
C) itisgettingthemostoutputbyusingallitsavailableresources.
D) itisabletoreachapointbeyonditsproductionpossibilitiesfrontier.
Answer: C
41) SupposethefigureshownrepresentstheproductionpossibilitiesfrontierforCountryA.Whichofthe followingcombinationsofgoodscouldCountryAconsumeintheabsenceoftrade?
A) (10airplanes,25trucks)
C) (10airplanes,30trucks)
Answer: B
B) (5airplanes,30trucks)
D) (15airplanes,15trucks)
42) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryAcouldpotentiallymakewouldbe:
A) (500iPods,500tablets).
C) (1,000iPods,500tablets).
Answer: B
B) (500iPods,250tablets).
D) (750iPods,150tablets).
43) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryAcouldpotentiallymakewouldbe:
A) (500iPods,300tablets).
C) (500iPods,500tablets).
Answer: D
B) (500iPods,400tablets).
D) (500iPods,200tablets).
44) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryAcould notmakewouldbe:
A) (500iPods,200tablets).
C) (500iPods,300tablets).
Answer: C
B) (500iPods,250tablets).
D) (500iPods,150tablets).
45) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear.
CountryBhas200workers.CountryAwouldbeworkingefficientlyifitproduced:
A) (500iPods,150tablets).
C) (500iPods,100tablets).
Answer: D
B) (500iPods,200tablets).
D) (500iPods,250tablets).
46) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryBcouldpotentiallymakewouldbe:
A) (200iPods,1,500tablets).
C) (300iPods,500tablets).
Answer: C
B) (400iPods,2,000tablets).
D) (100iPods,2,000tablets).
47) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryBcouldpotentiallymakewouldbe:
A) (300iPods,450tablets).
C) (400iPods,1tablet).
Answer: A
B) (400iPods,2,000tablets).
D) (200iPods,1,500tablets).
48) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.AbundleofgoodsthatCountryBcould notmakewouldbe:
A) (200iPods,750tablets).
C) (400iPods,250tablets).
Answer: C
B) (300iPods,500tablets).
D) (100iPods,1,000tablets).
49) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.CountryBwouldbeworkingefficientlyiftheywereproducing:
A) (200iPods,1,000tablets). B) (200iPods,1,750tablets).
C) (200iPods,750tablets). D) (200iPods,1,500tablets).
Answer: A
50) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.SupposeCountryB'spopulationofworkersincreasedto600.Whichof thefollowingstatementsisnowtrue?
A) CountryB'sproductionpossibilitiesarenowmorelimitedbecauseofcrowding.
B) CountryB'sproductionpossibilitiescurvehasrotatedoutfromthex-axis.
C) CountryB'sproductionpossibilitiescurvehasshiftedstraightin.
D) CountryB'sproductionpossibilitiescurvehasshiftedstraightout.
Answer: D
51) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TwopossibleconsumptionbundlesthatCountryAcouldproduce are:
A) (2,500bananas,500tomatoes)and(1,250bananas,800tomatoes)
B) (5,000bananas,1,000tomatoes)and(1,000bananas,5,000tomatoes)
C) (2,500bananas,750tomatoes)and(1,250bananas,750tomatoes)
D) (5,000bananas,0tomatoes)and(2,500bananas,500tomatoes)
Answer: D
52) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TwopossibleconsumptionbundlesthatCountryBcouldproduce are:
A) (7,200bananas,0tomatoes)and(4,000bananas,1,200tomatoes)
B) (3,600bananas,1,200tomatoes)and(1,800bananas,1,600tomatoes)
C) (1,800bananas,1,800tomatoes)and(900bananas,2,200tomatoes)
D) (7,200bananas,2,400tomatoes)and(3,600bananas,1,200tomatoes)
Answer: B
53) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.Which ofthefollowingstatementsistrue?
A) TheopportunitycostofatruckinCountryAis6trucks.
B) TheopportunitycostofatruckinCountryAis30cars.
C) TheopportunitycostofatruckinCountryAis3cars.
D) TheopportunitycostofatruckinCountryAis5cars.
Answer: D
54) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.Which ofthefollowingstatementsistrue?
A) TheopportunitycostofatruckinCountryBis4trucks.
B) TheopportunitycostofatruckinCountryBis3cars.
C) TheopportunitycostofatruckinCountryBis12cars.
D) TheopportunitycostofatruckinCountryBis1.5cars
Answer: B
55) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.If CountryAweretodivideitsresourcesequally,itcouldproduce:
A) 25carsand5trucks.
C) 15carsand3trucks.
Answer: C
B) 10carsand4trucks.
D) 30carsand6trucks.
56) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.The slopeofCountryA'sproductionpossibilitiesfrontier:
A) isconstantbecausetheopportunitycostremainsconstant.
B) measurestheopportunitycostoftrucksintermsofcars.
C) measuresthetrade-offthatworkersinCountryAfacewhendecidinghowtoallocate resources.
D) Allofthesestatementsaretrue.
Answer: D
57) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.The slopeofCountryA'sproductionpossibilitiesfrontieris________,andCountryB'sis________.
Answer: C
58) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.Oneof thereasonswhyCountryAandCountryBarenotrealisticrepresentationsofactualcountriesis:
A) theproductionpossibilitiescurvesarestraightlines;realisticoneswouldbeconcave.
B) theydonotaccountforpoliticalpressures.
C) theyonlyrepresenttheproductionoftwogoods.
D) Allofthesestatementsaretrue.
Answer: D
59) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Attheendoftheday,Tomcouldhave:
A) either12trapsand3bombs,or8trapsand3bombs.
B) either8trapsand2bombs,or4trapsand6bombs.
C) either8trapsand2bombs,or4trapsand3bombs.
D) either16trapsand4bombs,or8trapsand2bombs.
Answer: C
60) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Attheendoftheday,Jerrycouldhaveproduced:
A) 6trapsand4bombs.
C) 10trapsand5bombs.
Answer: A
B) 12trapsand6bombs.
D) 14trapsand7bombs.
61) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Attheendoftheday,ifJerrywasefficientwithhisresources,he couldhaveproduced:
A) 12trapsand0bombs.
C) 6trapsand2bombs.
Answer: D
B) 8trapsand2bombs.
D) 10trapsand2bombs.
62) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.ForTom,theopportunitycostofbuildingabombis________traps set.
A) 12 B) 16 C) 8 D) 4
Answer: D
63) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.ForJerry,theopportunitycostofbuildingabombis________traps set.
A) 7 B) 2 C) 4 D) 14
Answer: B
64) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.IfTomdivideshistimeevenlybetweenactivitiesandactsefficiently, hewillproduce:
A) 4trapsand3bombs.
C) 16trapsand4bombs.
Answer: B
B) 8trapsand2bombs.
D) 12trapsand3bombs.
65) Supposethat,giventhesamenumberofworkers,Canadacanproducefivetimesasmanycomputers or10timesasmanyairplanesasMexico.Whichofthefollowingstatementsistrue?
A) Canadahasanabsoluteadvantageintheproductionofcomputers,andMexicohasanabsolute advantageintheproductionofairplanes.
B) Canadahasanabsoluteadvantageintheproductionofbothairplanesandcomputers.
C) Mexicohasanabsoluteadvantageintheproductionofbothairplanesandcomputers.
D) Canadahasanabsoluteadvantageintheproductionofairplanes,andMexicohasanabsolute advantageintheproductionofcomputers.
Answer: B
66) Supposethat,giventhesamenumberofworkers,CanadacanproducetwotimesasmanyTVsor20 timesasmanypotatoesasChile.Whichofthefollowingstatementsistrue?
A) CanadacanbenefitfromtradingTVsbutnotpotatoeswithChile.
B) ChileshouldtradewithCanadaforpotatoesbecauseCanadahasanabsoluteadvantageinthe productionofpotatoes.
C) ChileshouldtradewithCanadaforTVsbecauseCanadahasanabsoluteadvantageinthe productionofpotatoes.
D) Noneofthesestatementsisnecessarilytrue.
Answer: D
67) Ifacountrypossessestheabsoluteadvantageintheproductionofonegood:
A) itcanproducemoreofthatgoodgiventhesameresources.
B) thenitmustalsopossessthecomparativeadvantageintheproductionoftheothergood.
C) thenitmustalsopossesstheabsoluteadvantageintheproductionoftheothergood.
D) thenitmustalsopossessthecomparativeadvantageintheproductionofthatgood.
Answer: A
68) Supposethatonlytwogoodsareproducedinaneconomy.Ifacountrypossessesthecomparative advantageintheproductionofonegood:
A) thenitcannotalsopossesstheabsoluteadvantageintheproductionofthatgood.
B) thenitmustalsopossessthecomparativeadvantageintheproductionoftheothergood.
C) thenitmustalsopossesstheabsoluteadvantageintheproductionofthatgood.
D) thenitcannotalsopossessthecomparativeadvantageintheproductionoftheothergood.
Answer: D
69) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Whichofthe followingstatementsistrue?
A) CanadahastheabsoluteadvantageintheproductionofshoesandtheU.S.hastheabsolute advantageintheproductionofapples.
B) TheU.S.hastheabsoluteadvantageintheproductionofshoesandCanadahastheabsolute advantageintheproductionofapples.
C) Canadahastheabsoluteadvantageintheproductionofbothshoesandapples.
D) TheU.S.hastheabsoluteadvantageintheproductionofbothshoesandapples.
Answer: C
70) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Whichofthe followingstatementsistrue?
A) Canadahasanabsoluteadvantageintheproductionofbothgoodsandacomparative advantageintheproductionofbothgoods.
B) Canadahasanabsoluteadvantageandacomparativeadvantageintheproductionofapples.
C) Canadahasanabsoluteadvantageandacomparativeadvantageintheproductionofshoes.
D) Canadahasanabsoluteadvantageintheproductionofbothgoodsandacomparative advantageintheproductionofneithergood.
Answer: B
71) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Whichofthe followingstatementsistrue?
A) Canadahasacomparativeadvantageintheproductionofshoes.
B) Comparativeadvantagedoesn'texistinthisscenario.
C) Bothcountrieshaveacomparativeadvantageintheproductionofshoes.
D) TheU.S.hasacomparativeadvantageintheproductionofshoes.
Answer: D
72) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Canadashould:
A) produceonlyshoes,sincetheyhaveacomparativeadvantageintheproductionofshoes,and nottrade.
B) produceapples,sincetheyhaveacomparativeadvantageintheproductionofapples,andnot trade.
C) produceapples,sincetheyhaveacomparativeadvantageintheproductionofapples,andtrade forshoes.
D) producebothgoods,sincetheyhaveanabsoluteadvantageinbothgoods,andnottrade.
Answer: C
73) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Theopportunity costofonepairofshoesforCanadais________,whiletheopportunitycostofonepairofshoesfor theU.S.is________.
A) 1/5apple;½apple
C) 2,000apples;200apples
Answer: D
B) 100apples;20apples
D) 5apples;2apples
74) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Theopportunity costforCanadais:
A) 5applesforeachpairofshoes. B) 5pairsofshoesforeachapple.
C) 1pairofshoesforevery2apples. D) 1/5appleforeachpairofshoes.
Answer: A
75) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Theopportunity costfortheU.S.is:
A) ½pairofshoesforevery2apples. B) 2applesforeachpairofshoes.
C) 2pairsofshoesforeachapple. D) ½appleforeachpairofshoes.
Answer: B
76) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.Theopportunity costofapairofshoesis________forCanadathantheU.S.,sotheU.S.hasthe________ advantageinshoeproduction.
A) higher;comparative
C) higher;absolute
Answer: A
B) lower;absolute
D) lower;comparative
77) SupposeaCanadianworkercanmake20pairsofshoesorgrow100applesperday.AnAmerican worker,ontheotherhand,canproduce10pairsofshoesorgrow20applesperday.TheU.S.has the________opportunitycostofapairofshoesthanCanada,so:________.
A) lower;theU.S.shouldspecializeinshoeproduction
B) lower;theU.S.shouldspecializeinappleproduction
C) higher;theU.S.shouldspecializeinappleproduction
D) higher;theU.S.shouldspecializeinshoeproduction
Answer: A
78) SupposeaCanadianworkercanmake50pairsofglovesorgrow300radishesperday.A Bangladeshiworker,ontheotherhand,canproduce100pairsofglovesorgrow200radishesper day.Theopportunitycostofonepairofglovesis:
A) 60radishesforCanadaand20radishesforBangladesh.
B) 6,000radishesforCanadaand2,000radishesforBangladesh.
C) 1/6radishesforCanadaand½radishesforBangladesh.
D) 6radishesforCanadaand2radishesforBangladesh.
Answer: D
79) SupposeaCanadianworkercanmake50pairsofglovesorgrow300radishesperday.A Bangladeshiworker,ontheotherhand,canproduce100pairsofglovesorgrow200radishesper day.Usingtheconceptofabsoluteadvantage,whichofthefollowingstatementsistrue?
A) Canadadoesnothavetheabsoluteadvantageintheproductionofeitherglovesorradishes.
B) Canadahastheabsoluteadvantageintheproductionofradishes,butnotgloves.
C) Canadahastheabsoluteadvantageintheproductionofbothglovesandradishes.
D) Canadahastheabsoluteadvantageintheproductionofgloves,butnotradishes.
Answer: B
80) SupposeaCanadianworkercanmake50pairsofglovesorgrow300radishesperday.A Bangladeshiworker,ontheotherhand,canproduce100pairsofglovesorgrow200radishesper day.Usingtheconceptsofabsoluteandcomparativeadvantage,wecansaythat:
A) Canadahasthecomparativeadvantageintheproductionofbothglovesandradishes.
B) Canadahasthecomparativeadvantageintheproductionofglovesonly.
C) Canadahasthecomparativeadvantageinneithertheproductionofglovesnorradishes.
D) Canadahasthecomparativeadvantageintheproductionofradishesonly.
Answer: D
81) SupposeaCanadianworkercanmake50pairsofglovesorgrow300radishesperday.A Bangladeshiworker,ontheotherhand,canproduce100pairsofglovesorgrow200radishesper day.Usingtheconceptsofadvantageandtrade,wecansaythat:
A) theopportunitycostofonepairofglovesisthesameforbothCanadaandBangladesh, thereforenocomparativeadvantageexists.
B) theopportunitycostofonepairofglovesislowerforCanadathanBangladesh,therefore Canadahasacomparativeadvantageingloveproduction.
C) theopportunitycostofonepairofglovesishigherforCanadathanBangladesh,therefore Canadahasacomparativeadvantageinradishproduction.
D) theopportunitycostofonepairofglovesisthesameforbothCanadaandBangladesh, thereforetheybothhavethecomparativeadvantageingloveproduction.
Answer: C
82) SupposeaCanadianworkercanmake50pairsofglovesorgrow300radishesperday.A Bangladeshiworker,ontheotherhand,canproduce100pairsofglovesorgrow200radishesper day.Whichofthefollowingstatementsistrue?
A) Bangladeshshouldspecializeingloveproductionsinceitpossessesthecomparativeadvantage ingloveproduction.
B) Bangladeshshouldonlyproduceradishessinceithastheabsoluteadvantageinradish production.
C) Bangladeshshouldonlyproduceglovessinceithastheabsoluteadvantageingloveproduction.
D) Bangladeshshouldspecializeinradishproductionsinceitpossessesthecomparativeadvantage inradishproduction.
Answer: A
83) SupposeaCanadianworkercanmake100chairsorcatch1,000fishperday.AChileanworker,on theotherhand,canproduce40chairsorcatch400fishperday.Whichofthefollowingstatements istrue?
A) BothCanadaandChilehaveacomparativeadvantageinchairproduction.
B) Chilehasthecomparativeadvantageinchairproduction.
C) Canadahasthecomparativeadvantageinchairproduction.
D) NeitherCanadanorChilehasacomparativeadvantageinchairproduction.
Answer: D
84) SupposeaCanadianworkercanmake100chairsorcatch1000fishperday.AChileanworker,on theotherhand,canproduce40chairsorcatch400fishperday.Canadapossessesa(n)________ advantageinchairproduction,but nota(n)________advantageinfishproduction.
A) absolute;comparative
C) comparative;absolute
Answer: A
B) absolute;absolute
D) comparative;comparative
85) SupposeaCanadianworkercanmake100chairsorcatch900fishperday.AChileanworker,on theotherhand,canmake40chairsorcatch400fishperday.Canadahasanabsoluteadvantagein theproductionofbothfishandchairs.Thismeansthat:
A) CanadashouldtakeadvantageofChilebytradingwiththem.
B) CanadacanproducemorefishandchairsthanChilegiventhesameamountofworkers.
C) CanadashouldproduceonlyfishandtradewithChiletogetchairs.
D) CanadashouldproducebothgoodsandnottradewithChile.
Answer: B
86) Whenaproducerhastheabilitytoproduceagoodorserviceataloweropportunitycostthanothers, economistssaytheproducer:
A) hasnoreasontotradewithothers.
B) hasacomparativeadvantageatproducingthatgood.
C) hasanabsoluteadvantageatproducingthatgood.
D) isefficient.
Answer: B
87) Whenaproducerhasacomparativeadvantageinproducingagood,itmeanstheproducer:
A) hasnoreasontotradewithothers.
B) hastheabilitytoproducethegoodataloweropportunitycostthanothers.
C) isefficient.
D) canproducemoreofthatgoodthanotherswiththesamenumberofworkers.
Answer: B
88) Whenaproducerhasanabsoluteadvantageatproducingagood,itmeanstheproducer:
A) canproducemoreofthatgoodthanotherswiththesamenumberofworkers.
B) islessefficientthanotherproducers.
C) hasnoreasontotradewithothers.
D) hastheabilitytoproduceagoodorserviceataloweropportunitycostthanothers.
Answer: A
89) CanadaandtheU.S.tradehockeyskatesandapplepie.IfCanadahasanabsoluteandacomparative advantageintheproductionofapplepie,then:
A) Canadamusthavethecomparativeadvantageintheproductionofskates,too.
B) TheU.S.musthavetheabsoluteadvantageintheproductionofskates.
C) TheU.S.musthavethecomparativeadvantageintheproductionofskates.
D) TheU.S.musthavetheabsoluteandcomparativeadvantageintheproductionofskates.
Answer: C
90) Whichofthefollowingstatementsaboutabsoluteandcomparativeadvantageistrue?
A) Acountrymayhaveanabsoluteadvantagebutnotacomparativeadvantageintheproduction ofagood
B) Acountrymayhavetheabsoluteadvantageintheproductionofallgoods.
C) Acountrymayhaveacomparativeadvantagebutnotanabsoluteadvantageintheproduction ofagood.
D) Allofthesestatementsaretrue.
Answer: D
91) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.CountryBhasthecomparativeadvantageintheproductionof:
A) bothiPodsandtablets.
C) iPodsonly.
Answer: B
B) tabletsonly.
D) neitheriPodsortablets.
92) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear.
CountryBhas200workers.CountryAhastheabsoluteadvantageintheproductionof:
A) neitheriPodsortablets.
C) iPodsonly.
Answer: C
B) tabletsonly.
D) bothiPodsandtablets.
93) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.SupposeCountryB'spopulationofworkersincreasedto600.Wecan say:
A) CountryBnowpossessestheabsoluteadvantageintabletsonly.
B) CountryBnowpossessestheabsoluteadvantageintheproductionofbothgoods.
C) CountryBnowhasthecomparativeadvantageiniPodproduction.
D) CountryBhasnoneedtotradenow.
Answer: B
94) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TheopportunitycostofonetomatoinCountryAis:
A) 20bananas. B) 100bananas. C) 5bananas. D) 4bananas.
Answer: C
95) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TheopportunitycostofonetomatoinCountryBis:
A) 6bananas. B) 108bananas. C) 18bananas. D) 3bananas.
Answer: D
96) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.Theopportunitycostofonetomatois:
A) impossibletocalculatewithoutmoreinformation.
B) higherinCountryAthanCountryB.
C) thesameinbothcountries.
D) lowerinCountryAthanCountryB.
Answer: B
97) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.Suppose thataworkerinCountryBcanmakeeither18bananasor6tomatoeseachyear.CountryBhas:
A) anabsoluteadvantageintheproductionofbananas,butnottomatoes.
B) anabsoluteadvantageinneithergood.
C) anabsoluteadvantageintheproductionofbothbananasandtomatoes.
D) anabsoluteadvantageintheproductionoftomatoes,butnotbananas.
Answer: D
98) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.ForaworkerinCountryB,thetrade-offtomakingonetomatois: A) 4bananas. B) 5bananas. C) 2bananas. D) 3bananas.
Answer: D
99) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.ForaworkerinCountryA,thetrade-offofmakingonetomatois: A) 4bananas. B) 2bananas. C) 3bananas. D) 5bananas.
Answer: D
100) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.Which ofthefollowingstatementscanbesaidofCountryA?
A) CountryAdoesnotpossessthecomparativeadvantageineithergood.
B) CountryAhasthecomparativeadvantageincarandtruckproduction.
C) CountryAhasthecomparativeadvantageincarproductiononly.
D) CountryAhasthecomparativeadvantageintruckproductiononly.
Answer: C
101) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB. Assumingbothcountrieshavethesameamountofresourcesavailabletothem,whichofthefollowing statementsistrue?
A) CountryAhastheabsoluteadvantageintheproductionofbothcarsandtrucks.
B) CountryAhasanabsoluteadvantageintheproductionofcars,andCountryBhastheabsolute advantageintheproductionoftrucks.
C) CountryAhasanabsoluteadvantageintheproductionoftrucks,andCountryBhasthe absoluteadvantageintheproductionofcars.
D) CountryAhastheabsoluteadvantageinneithertheproductionofcarsnortrucks.
Answer: A
102) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB. CountryAhasthecomparativeadvantagein:
A) carsandtrucks.
B) carsandCountryBhasthecomparativeadvantageintrucks.
C) trucksandCountryBhasthecomparativeadvantageincars.
D) neithercarsnortrucks.
Answer: B
103) IftheopportunitycostofproducingcornislowerforAlbertathanforSaskatchewan,then:
A) Saskatchewanhasthecomparativeadvantageincornproduction.
B) SaskatchewanshouldexportcorntoOhio.
C) Saskatchewanshouldspecializeincornproduction.
D) Albertahasthecomparativeadvantageincornproduction.
Answer: D
104) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.AfterlookingattheproductionpossibilitiesforbothTomandJerry, wecansurmisethat:
A) Tomhastheabsoluteadvantageintheproductionofbothtrapsandbombs.
B) TomhastheabsoluteadvantageintheproductionoftrapsandJerryhastheabsoluteadvantage inbombproduction.
C) TomhastheabsoluteadvantageintheproductionofbombsandJerryhastheabsolute advantageintrapproduction.
D) Jerryhastheabsoluteadvantageintheproductionofbothtrapsandbombs.
Answer: B
105) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.AfterlookingattheproductionpossibilitiesforbothTomandJerry, wecanconcludethat:
A) Nocomparativeadvantageexists.
B) Tomhasthecomparativeadvantageintrapproduction.
C) Jerryhasthecomparativeadvantageintrapproduction.
D) Tomhasthecomparativeadvantageinbombproduction.
Answer: B
106) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.BecauseTomhasa________opportunitycostforonebomb comparedtoJerry,weknowTomhas________.
A) higher;thecomparativeadvantageintrapproduction
B) higher;thecomparativeadvantageinbombproduction
C) lower;thecomparativeadvantageinbombproduction
D) similar;noadvantageinproductionofeithergood
Answer: A
107) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Jerryhasacomparativeadvantagein:
A) trapproductionbecausehehasthehigheropportunitycostofatrap.
B) bombproductionbecausehehastheloweropportunitycostofabomb.
C) bombproductionbecausehehasthehigheropportunitycostofabomb.
D) trapproductionbecausehehastheloweropportunitycostofatrap.
Answer: B
108) Acountrythatspecializes:
A) spendsallofitsresourcesproducingthosegoodsithasanabsoluteadvantageinproducing.
B) spendsallofitsresourcesproducingwhatitcanmakemoreofthananyoneelse.
C) spendsallofitsresourcesproducingonlywhatothercountriesneed.
D) spendsallofitsresourcesproducingaparticulargood.
Answer: D
109) Whentwocountriesspecializeandtradewithoneanother:
A) totalproductionincreases,butonlyifcomparativeadvantageexists.
B) totalproductionmayincrease,dependingontraderelations.
C) totalproductionremainsunchangedbutconsumptionrises.
D) totalproductionandconsumptionremainunchanged.
Answer: A
110) Peoplechoosetospecializebecause:
A) itallowspeopletoacquiregoodsataloweropportunitycost.
B) itcanleadtoconsumptionbeyondtheproductionpossibilitiesfrontier.
C) itcanleadtomoreconsumptionthanbeingself-sufficient.
D) Allofthesestatementsaretrue.
Answer: D
111) Theimprovementinoutcomesthatoccurswhenspecializedproducersexchangegoodsandservices iscalled:
A) absoluteadvantage. B) comparativeadvantage.
C) thegainsfromtrade. D) specialization.
Answer: C
112) Peoplewillchoosetospecializeandtradeif:
A) theycanacquirethegoodstheywantatalowercostthanitwouldcostthemtomakethegoods themselves.
B) theycanacquirethegoodstheywantatahighercostthanitwouldcostthemtomakethe goodsthemselves.
C) theycanacquirethegoodstheywantfromacapitalisticsystemofexchange.
D) theycanacquirethegoodstheywantfromsomeonewhoiswillingtotradewiththem.
Answer: A
113) Peopleoftenchoosetospecializeandtradebecause:
A) itallowsthemtogettoapointbeyondtheirownproductionpossibilitiesfrontier.
B) theycanconsumeabundleofgoodsbeyondtheirownproductionpossibilities.
C) itallowsthemtoenjoymoregoodsthantheycancreateontheirown.
D) Allofthesestatementsaretrue.
Answer: D
114) Twocountrieswillchoosetospecializeandtradeonlyif:
A) theopportunitycostsarethesameforthetwonations.
B) onecountrypossessestheabsoluteadvantageinbothgoods,butthecomparativeadvantagein onlyonegood.
C) theopportunitycostsareastronomicallyhighforproducingthegoodsontheirown.
D) thetermsoftradefallbetweentheiropportunitycostsforproducingthegoodsontheirown.
Answer: D
115) Whenacountrylosesitscomparativeadvantageintheproductionofagood:
A) itwillgainthecomparativeadvantageintheproductionofanothergood.
B) itwillbecomealoserintradeinthelongrun.
C) itwillstillhavetheabsoluteadvantageintheproductionofthegood.
D) itshouldstoptradingandbecomeself-sufficient.
Answer: A
116) IfFranceiscapableofproducingeithercheeseorwineorsomecombinationofthosetwoproducts, then:
A) Franceshouldremainself-sufficientifithastheabsoluteadvantageintheproductionofboth.
B) Franceshouldproducetheoneitismoreefficientatproducing.
C) Franceshouldproducetheoneforwhichithasacomparativeadvantage.
D) Franceshouldproducetheoneforwhichithasahigheropportunitycost.
Answer: C
117) IfSpainiscapableofproducingeithertapasorsoccerballsorsomecombinationofthosetwo products,then:
A) Spainshouldremainself-sufficientifitcanproducebothefficiently.
B) Spainshouldproducethegoodithasacomparativeadvantageinproducing.
C) Spainshouldproducethegoodithasanabsoluteadvantageinproducing.
D) Spainshouldtradeonlyifitpossessestheabsoluteadvantageintheproductionofbothgoods.
Answer: B
118) AssumethattheopportunitycostforGermanytoproduceajetis50cars.Somepossible combinationsofoutputforGermanycouldbe:
A) (2,500jets,2,000cars)and(2,300jets,20,000cars).
B) (1,000jets,5,000cars)and(900jets,15,000cars).
C) (1,000jets,5,000cars)and(900jets,10,000cars).
D) (2,500jets,2,000cars)and(2,300jets,3,000cars).
Answer: C
119) SupposeEnglandhasacomparativeadvantageoverCanadainproducingtea.Ifthisistrue,then:
A) EnglandshouldproducemoreteathanitwantsandselltheresttoCanada.
B) CanadahasnothingtogainfrombuyingteafromEngland.
C) Englandshouldnotproducetea,andshouldinsteadbuyitallfromCanada.
D) EnglandshouldproduceasmallamountofteaandbuytherestoftheteaitwantsfromCanada.
Answer: A
120) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.CountryBhasthe________advantageintheproductionoftablets, whichmeanstheyshouldspecializein________.
A) absolute;iPods
C) absolute;tablets
Answer: D
B) comparative;iPods
D) comparative;tablets
121) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.Whichofthefollowingistrue?
A) Theopportunitycostof1tabletinCountryAis2iPods.
B) Theopportunitycostof1iPodinCountryBis2tablets.
C) TheopportunitycostoftabletsislowerinCountryAthanCountryB.
D) Theopportunitycostof1iPodinCountryAis2tablets.
Answer: A
122) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TheworkersinCountryAshouldspecializein________because theypossessthe________intheproductionofthatgood.
A) bananas;absoluteadvantage B) tomatoes;absoluteadvantage
C) bananas;comparativeadvantage D) tomatoes;comparativeadvantage
Answer: C
123) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.TheworkersinCountryBwillbenefitfromtradeifthey:
A) specializeinbananasbecausetheyhaveanabsoluteadvantageinbananaproduction.
B) specializeintomatoesbecausetheiropportunitycostoftomatoesislowerthanCountryA's.
C) specializeintomatoesbecausetheiropportunitycostoftomatoesishigherthanCountryA's.
D) specializeinbananasbecausetheyhaveacomparativeadvantageinbananaproduction.
Answer: B
124) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.After comparingeachcountry'sproductionpossibilitiescurve,itisclearthat:
A) CountryAshouldspecializeintrucksandCountryBshouldspecializeincars,andbothwill benefitfromtrade.
B) CountryAwillnotbenefitfromtrade.
C) CountryBwilllosebytradingwithCountryA.
D) CountryAshouldspecializeincarsandCountryBshouldspecializeintrucks,andbothwill benefitfromtrade.
Answer: D
125) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Theopportunitycostofonebombis________forTomand ________forJerry.ThereforeTomshouldspecializein________.
A) 4traps;2traps;bombs
C) 16traps;14traps;traps
Answer: B
B) 4traps;2traps;traps
D) 16traps;14traps;bombs
126) BarbieandKenaremarried.Barbiestayshomeandcaresforthechildren,whileKenspendshisday atworkearningmoneytosupportthehousehold.Economistswouldlikelyconclude:
A) Barbiehasthecomparativeadvantageincaringforthechildren,andsothefamilybenefitsby BarbiestayinghomeandKenearningmoneyatwork.
B) Kenhasthecomparativeadvantageincaringforthechildren,whileBarbiehasitinearning money.
C) KenhasaloweropportunitycostofcaringforthechildrencomparedtoBarbie,andtherefore choosestoletBarbiespecializeinchildcarewhileheworks.
D) BarbiehasahigheropportunitycostofcaringforthechildrencomparedtoKen,andtherefore choosestospecializeinchildcare.
Answer: A
127) SupposethefigureshownrepresentstheproductionpossibilitiesfrontierforCountryA.CountryBoffersto tradefourtrucksforeveryairplane.AssumingCountryAspecializesinairplaneproduction,whichofthe followingcombinationsofgoodscouldCountryAconsume?
A) (5airplanes,20trucks)
C) (15airplanes,20trucks)
Answer: C
B) (10airplanes,20trucks)
D) (10airplanes,30trucks)
128) Acountry'snewestrulerhasdecidedthecountrywillbecomeself-sufficientandceasestradewith therestoftheworld.Thelikelyoutcomeofthisactionwillbethatthecountry'scitizenswillbe:
A) betteroffthanbeforeonlyiftheyhavethecomparativeadvantageinthegoodstheyconsume.
B) betteroffthanbeforeonlyiftheyhavetheabsoluteadvantageintheproductionofmostgoods theyconsume.
C) forcedtoconsumelessthanbeforeiftheypossessedacomparativeadvantageintheproduction ofagood.
D) betteroffthanbeforeiftheypossessanabsoluteadvantageintheproductionofagood.
Answer: C
129) Economictheorystatesthatlosingcomparativeadvantageinonegoodmeanscreatinga comparativeadvantageinanother.Thissuggeststhat:
A) outsourcingcanbegoodoverallforasociety.
B) thosewhoexperiencethetransitionmayfinditdifficultintheshortrun.
C) itcanbeseenasasuccessinthelongrun.
D) Allofthesestatementsaretrue.
Answer: D
130) SupposethataworkerinCountryAcanmakeeither10iPodsor5tabletseachyear.CountryAhas 100workers.SupposeaworkerinCountryBcanmakeeither2iPodsor10tabletseachyear. CountryBhas200workers.Whichofthefollowingistrue?
A) CountryBshouldproducetabletsandCountryAshouldproduceiPods,andtheycouldbenefit fromtrade.
B) BecauseCountryBhastheabsoluteadvantageinproducingtablets,theyshouldspecializein theproductionoftablets.
C) CountryBshouldproduceiPodsandCountryAshouldproducetablets,andtheycouldbenefit fromtrade.
D) Neithercountrycanbenefitfromtradesincenocomparativeadvantageexists.
Answer: A
131) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.SupposeCountryBdecidestospecializeintomatoes,andCountry Aspecializesinbananas.Whattermsoftradewouldbothcountriesagreeto?
A) Onetomatoforfourbananas
C) Onetomatoforonebanana
Answer: A
B) Onetomatoforsix bananas
D) Onetomatofortwobananas
132) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.SupposeCountryAspecializesinbananas,andCountryB specializesintomatoes.ThelimitstothetermsoftradethatCountryAwouldfindacceptableare:
A) CountryAwillgivenomorethan1tomatoforevery5bananas.
B) CountryAwillgivenolessthan5bananasforeachtomato.
C) CountryAwillgivenomorethan5bananasforeachtomato.
D) CountryAwillgivenolessthan1tomatoforevery5bananas.
Answer: C
133) SupposethataworkerinCountryAcanmakeeither25bananasor5tomatoeseachyear.CountryA has200workers.SupposeaworkerinCountryBcanmakeeither18bananasor6tomatoeseach year.CountryBhas400workers.SupposeCountryAspecializesinbananas,andCountryB specializesintomatoes.ThelimitstothetermsoftradethatCountryBwouldfindacceptableare:
A) CountryBwillacceptnomorethan1tomatoforevery3bananas.
B) CountryBwillacceptnolessthan1tomatoforevery3bananas.
C) CountryBwillacceptnolessthan3bananasforeachtomato.
D) CountryBwillacceptnomorethan3bananasforeachtomato.
Answer: C
134) Whatdeterminesacountry'slimitstoacceptabletermsoftrade?
A) Theiropportunitycosts
B) Whethertheypossesstheabsoluteadvantageintheproductionofagood
C) Bothofthesestatementsaretrue.
D) Neitherofthesestatementsistrue.
Answer: A
135) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.After examiningeachcountry'sproductionpossibilitiescurve,itisclearthat:
A) onlyCountryAwillbenefitfromtrade.
B) bothcountriescanbenefitfromtradebecauseabsoluteadvantageexists.
C) bothcountriescanbenefitfromtradebecausecomparativeadvantageexists.
D) neithercountrywillbenefitfromtrade.
Answer: C
136) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB.After examiningtheproductionpossibilitiesofeachcountry,wecansurmisethat:
A) CountryA'sopportunitycostofacaristhesameasthatofCountryB,andsotheywillnot benefitfromtrade.
B) CountryA'sopportunitycostofacarislowerthanthatofCountryB,andsotheyshould specializeincarsandtrade.
C) CountryA'sopportunitycostofacardoesnotdetermineacountry'sdecisiontotrade;itis absoluteadvantagethatdrivesthatdecision.
D) CountryA'sopportunitycostofacarishigherthanthatofCountryB,andsotheyshould specializeincarsandtrade.
Answer: B
137) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB. Consideringbothcountry'sproductionpossibilitiesfrontiers,weknowthat:
A) theywouldbothagreetotermsoftradeofonetrucktoeightcars.
B) theywouldbothagreetotermsoftradeofonetrucktofourcars.
C) theywouldbothagreetotermsoftradeofonetrucktotwocars.
D) theywouldbothagreetotermsoftradeofonetrucktosixcars.
Answer: B
138) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB. Consideringbothcountry'sproductionpossibilitiesfrontiers,wecaninferthat:
A) CountryAwillspecializeintrucks,andbewillingtoacceptnomorethan5carsforeachtruck.
B) CountryAwillspecializeincars,andbewillingtogivenolessthan5carsforeachtruck.
C) CountryAwillspecializeintrucks,andbewillingtoacceptnolessthan5carsforeachtruck.
D) CountryAwillspecializeincars,andbewillingtogivenomorethan5carsforeachtruck.
Answer: D
139) Refertothefigureshown,whichrepresentstheproductionpossibilitiesfrontiersforCountriesAandB. Consideringbothcountry'sproductionpossibilitiesfrontiers,wecanconcludethat:
A) CountryBwillspecializeincars,andbewillingtogivenofewerthan3carsforeachtruck.
B) CountryBwillspecializeincars,andbewillingtogivenomorethan3carsforeachtruck.
C) CountryBwillspecializeintrucks,andbewillingtoacceptnomorethan3carsforeachtruck.
D) CountryBwillspecializeintrucks,andbewillingtoacceptnofewerthan3carsforeach truck.
Answer: D
140) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.Basedontheirproductionpossibilitiesfrontiers,TomandJerry:
A) willnotdecidetotradebecausenocomparativeadvantageexists.
B) canbothbenefitfromtradebecauseabsoluteadvantageexists.
C) canbothbenefitfromtradebecausecomparativeadvantageexists.
D) cannotbenefitfromtradebecauseTomhastheabsoluteadvantageinbothgoods.
Answer: C
141) TomandJerryhavetwotaskstodoallday:settrapsandbuildbombs.IfTomspendsalldaysetting traps,hewillhaveset16traps.Ifheinsteaddevoteshisdaytobuildingbombs,Tomwillbuild4 bombs.IfJerryspendshisdaysettingtraps,hewillset14traps;ifhespendsthedaybuilding bombs,hewillbuild7bombs.IfJerrydecidestospecializeinbuildingbombs,whatarethelimitsto histermsoftrade?
A) Jerrywillacceptnolessthan2trapsforeachbomb.
B) Jerrywillacceptnolessthan7trapsforeachbomb.
C) Jerrywillacceptnolessthan2bombsforeachtrap.
D) Jerrywillacceptnolessthan7bombsforeachtrap.
Answer: A
142) Theconceptsofcomparativeadvantage,specialization,andtradeformacompellingargumentin favorof:
A) protectionism.
C) freetrade.
Answer: C
B) self-sufficiency.
D) onlyexporting,neverimportinggoods.
143) Theconceptsofcomparativeadvantage,specialization,andtrade:
A) canbeusefulinexplainingwhycountriesimportandexportcertaingoods.
B) canbeusefulinexplainingwhyweallowourselvestobeinterdependentonothers.
C) canbeusefulinexplainingwhyindividualstypicallyworkatonejob,andbuytheothergoods andservicestheyneed.
D) Allofthestatementsaretrue.
Answer: D
Answer Key
Testname: UNTITLED87
1) B
2) B
3) A
4) B
5) C
6) C
7) A
8) D
9) B
10) A
11) D
12) D
13) C
14) A 15) B
16) D
17) C
18) D
19) A
20) C
21) D
22) B
23) D
24) B
25) A
26) B
27) C
28) C
29) A
30) D
31) B
32) C
33) B
34) B
35) D
36) C
37) B
38) B
39) D
40) C
41) B
42) B
43) D
44) C
45) D
46) C
47) A
48) C
49) A
50) D
Answer Key
Testname: UNTITLED87
51) D
52) B
53) D
54) B
55) C
56) D
57) C
58) D
59) C
60) A
61) D
62) D
63) B
64) B 65) B
66) D
67) A
68) D 69) C
70) B
71) D
72) C
73) D
74) A
75) B
76) A
77) A
78) D
79) B
80) D
81) C
82) A 83) D
84) A
85) B
86) B
87) B
88) A
89) C
90) D
91) B
92) C
93) B 94) C
95) D 96) B
97) D 98) D
99) D
100) C
Answer Key
Testname: UNTITLED87
101) A
102) B
103) D 104) B
105) B
106) A
107) B
108) D
109) A
110) D
111) C
112) A
113) D
114) D
115) A
116) C 117) B
118) C
119) A
120) D
121) A
122) C
123) B
124) D
125) B 126) A
127) C
128) C
129) D 130) A
131) A
132) C
133) C
134) A 135) C
136) B
137) B
138) D 139) D 140) C
141) A 142) C
143) D