Question 1

What limits the terms of trade that a country would find acceptable?

Accepted Answer

A)  The country's opportunity costs of production.
B)  Whether the country has an absolute advantage at producing a good.
C)  How much the country values the good for which it is trading.
D)  When the country has a comparative advantage at producing both goods.E) B) and C)
F) A) and D)

Question 2

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

Accepted Answer

A)  gains from trade.
B)  absolute advantage.
C)  comparative advantage.
D)  specialization.E) C) and D)
F) A) and B)

Question 3

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. The workers in Country A should specialize in producing _____ because it has a(n) _____ at producing that good.

Accepted Answer

A)  bananas; comparative advantage
B)  tomatoes; comparative advantage
C)  bananas; absolute advantage
D)  tomatoes; absolute advantageE) All of the above
F) B) and D)

Question 4

When a producer is operating efficiently, it is producing:

Accepted Answer

A)  at a point on its production possibilities frontier.
B)  at a point on or below its production possibilities frontier.
C)  only one good.
D)  the good in which it has an absolute advantage.E) A) and B)
F) A) and C)

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

Accepted Answer

A)  12 chairs and 0 tables.
B)  10 chairs and 2 tables.
C)  8 chairs and 2 tables.
D)  6 chairs and 2 tables.E) A) and B)
F) A) and C)

Question 6

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) C) and D)
F) B) and C) C

Question 7

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

Accepted Answer

A)  should display a constant opportunity cost of a good, as more of that good is produced.
B)  should display a decreasing opportunity cost of a good, as more of that good is produced.
C)  should display an increasing opportunity cost of a good as more of that good is produced.
D)  cannot be drawn, as too many variables would need to be taken into consideration.E) A) and B)
F) A) and D)

Question 8

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Why are these graphs not realistic representations of actual countries?

Accepted Answer

A)  The production possibilities frontiers are straight lines rather than bowed out.
B)  They only represent the production of two goods.
C)  They only represent two countries.
D)  All of these statements are reasons why these graphs are not realistic representations.E) A) and D)
F) A) and C) D

Question 9

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

Accepted Answer

A)  producing bananas, but not tomatoes.
B)  producing bananas and tomatoes.
C)  producing tomatoes, but not bananas.
D)  producing neither good.E) None of the above
F) B) and C)

Question 10

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

Accepted Answer

A)  The United States has a comparative advantage at producing nets.
B)  Chile has a comparative advantage at producing nets.
C)  Both the United States and Chile have a comparative advantage at producing nets.
D)  Neither the United States nor Chile has a comparative advantage at producing nets.E) A) and B)
F) A) and D)

Question 11

Choosing to produce at any point within (inside, not on) a production possibilities frontier is:

Accepted Answer

A)  inefficient, meaning the society would not be using all its available resources in their best possible uses.
B)  efficient, meaning the society would be using all its available resources in their best possible uses.
C)  unobtainable, meaning the society cannot produce that combination of goods.
D)  efficient, but not attainable.E) None of the above
F) A) and D)

Question 12

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country B is:

Accepted Answer

A)  12 cars.
B)  4 trucks.
C)  1.5 cars
D)  3 cars.E) A) and B)
F) B) and D)

Question 13

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country A is:

Accepted Answer

A)  30 cars.
B)  6 trucks.
C)  5 cars.
D)  3 cars.E) C) and D)
F) A) and D)

Question 14

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Accepted Answer

A)  shift inward.
B)  shift outward.
C)  remain the same.
D)  shift inward, then shift outward.E) A) and B)
F) All of the above

Question 15

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. Which of the following is a bundle of goods that Country A could not make?

Accepted Answer

A)  (250 iPhones, 250 iPads) 
B)  (400 iPhones, 250 iPads) 
C)  (500 iPhones, 250 iPads) 
D)  (500 iPhones, 300 iPads) E) C) and D)
F) All of the above

Question 16

Consider the production possibilities frontier displayed in the figure shown. If a society with this frontier chooses to produce 200 bushels of apples, it can produce no more than:

Accepted Answer

A)  20 watermelons.
B)  15 watermelons.
C)  10 watermelons.
D)  5 watermelons.E) A) and D)
F) None of the above

Question 17

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

Accepted Answer

A)  measures the opportunity cost of trucks in terms of cars.
B)  measures the trade-off that Country A faces when deciding how to allocate resources.
C)  is constant, because the opportunity cost remains constant.
D)  All of these statements are true.E) A) and D)
F) A) and B)

Question 18

Two countries will choose to specialize and trade only if:

Accepted Answer

A)  the terms of trade fall between the two nations' opportunity costs for producing the goods on their own.
B)  the opportunity costs are the same for the two nations.
C)  the opportunity costs for producing the goods on their own are astronomically high.
D)  one country has an absolute advantage at producing both goods, but a comparative advantage at producing only one good.E) B) and C)
F) A) and D)

Question 19

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. A bundle of goods that Country A could potentially make would be:

Accepted Answer

A)  (1,000 iPhones, 500 iPads) .
B)  (500 iPhones, 500 iPads) .
C)  (500 iPhones, 250 iPads) .
D)  (750 iPhones, 150 iPads) .E) A) and D)
F) A) and C)

Question 20

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 would be using resources efficiently if it was producing:

Accepted Answer

A)  (200 iPhones, 1,750 iPads) .
B)  (200 iPhones, 1,500 iPads) .
C)  (200 iPhones, 1,000 iPads) .
D)  (200 iPhones, 750 iPads) .E) C) and D)
F) None of the above C

Exam 2: Specialization and Exchange

What limits the terms of trade that a country would find acceptable?

Correct Answer
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The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

Correct Answer
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Correct Answer
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When a producer is operating efficiently, it is 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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C

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

Correct Answer
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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Why are these graphs not realistic representations of actual countries?

Correct Answer
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D

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

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

Correct Answer
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Choosing to produce at any point within (inside, not on) a production possibilities frontier is:

Correct Answer
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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country B is:

Correct Answer
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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country A is:

Correct Answer
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An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Correct Answer
verified

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. Which of the following is a bundle of goods that Country A could not make?

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. If a society with this frontier chooses to produce 200 bushels of apples, it can produce no more than:

Correct Answer
verified

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

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

Correct Answer
verified

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. A bundle of goods that Country A could potentially make would be:

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 B would be using resources efficiently if it was producing:

Correct Answer
verified
C

Exam 2: Specialization and Exchange

What limits the terms of trade that a country would find acceptable?

Correct AnswerverifiedShow Answer

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a producer is operating efficiently, it is 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 AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Why are these graphs not realistic representations of actual countries?

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Choosing to produce at any point within (inside, not on) a production possibilities frontier is:

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country B is:

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The opportunity cost of a truck in Country A is:

Correct AnswerverifiedShow Answer

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

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. Which of the following is a bundle of goods that Country A could not make?

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. If a society with this frontier chooses to produce 200 bushels of apples, it can produce no more than:

Correct AnswerverifiedShow Answer

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

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 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. A bundle of goods that Country A could potentially make would be:

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 B would be using resources efficiently if it was producing:

Correct AnswerverifiedC

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C

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D

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C