Question 1

Consider the production possibilities frontier in the figure shown. The opportunity cost of one cigar between points A and B is:

Accepted Answer

A)  1/5 car.
B)  20 cars.
C)  5 cars.
D)  10 cars.E) A) and C)
F) None of the above

Question 2

Consider the production possibilities frontier displayed in the figure shown. Which points are efficient and attainable with existing resources?

Accepted Answer

A)  Only point II
B)  Only point I
C)  Points I and IV
D)  Points I, III, and IVE) None of the above
F) A) and C)

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. Country B specializes in producing tomatoes and Country A specializes in producing bananas. What terms of trade would both countries be willing to agree to?

Accepted Answer

A)  One tomato for one banana
B)  One tomato for two bananas
C)  One tomato for four bananas
D)  One tomato for six bananasE) B) and D)
F) B) and C)

Question 4

Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could be produced?

Accepted Answer

A)  400 bushels of apples, 20 watermelons
B)  100 bushels of apples, 15 watermelons
C)  300 bushels of apples, 10 watermelons
D)  400 bushels of apples, 10 watermelonsE) A) and B)
F) A) and C)

Question 5

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is true?Point A is unattainable.Point B is inefficient.Points A and D are inefficient.Points C and D are attainable.

Accepted Answer

A)  I and II only
B)  III only
C)  II and IV only
D)  IV onlyE) All of the above
F) None of the above

Question 6

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. What are their respective opportunity costs of one pair of gloves?

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 ½ radishes for Bangladesh
D)  6,000 radishes for the United States and 2,000 radishes for BangladeshE) A) and D)
F) All of the above

Question 7

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 B could potentially make?

Accepted Answer

A)  (400 iPhones, 2,000 iPads) 
B)  (200 iPhones, 1,500 iPads) 
C)  (300 iPhones, 450 iPads) 
D)  (400 iPhones, 1 iPad) E) C) and D)
F) B) and C)

Question 8

Consider the production possibilities frontier in the figure shown. The opportunity cost of cars between points B and C is:

Accepted Answer

A)  greater than the opportunity cost of cars between points A and B.
B)  less than the opportunity cost of cars between points A and B.
C)  greater than the opportunity cost of cars between any other two points.
D)  There is no opportunity cost between points B and C.E) A) and D)
F) A) and C)

Question 9

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

Accepted Answer

A)  The United States is taking advantage of Cambodia and is the only beneficiary to the trade.
B)  Cambodia has been pressured to enter trade and is not benefiting at all.
C)  Both the United States and Cambodia can benefit from trading.
D)  The United States is being charitable and not benefiting from the trade at all.E) None of the above
F) A) and B)

Question 10

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 true?

Accepted Answer

A)  Country B should produce iPads and Country A should produce iPhones, and they could both benefit from trade.
B)  Country B should produce iPhones and Country A should produce iPads, and they could both benefit from trade.
C)  Neither country would benefit from trade because there is no comparative advantage at producing these goods.
D)  Because Country B has an absolute advantage at producing iPads, it should specialize in their production.E) B) and C)
F) None of the above

Question 11

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

Accepted Answer

A)  Specialization can lead people to consume more than if they would if they were self-sufficient.
B)  Specialization can lead people to consume beyond the production possibilities frontier.
C)  Specialization allows people to acquire goods at a lower opportunity cost.
D)  Production standards are harder to control if goods are imported from other countries.E) A) and B)
F) B) and D)

Question 12

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

Accepted Answer

A)  at point C, because it is the safest.
B)  at point B, because this is the most the society can produce.
C)  at any point that produces some of each good.
D)  at any point on the frontier rather than inside it.E) A) and B)
F) B) and C)

Question 13

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

Accepted Answer

A)  10 bushels of apples.
B)  20 bushels of apples.
C)  30 bushels of apples.
D)  40 bushels of apples.E) B) and D)
F) All of the above

Question 14

The concepts of comparative advantage, specialization, and trade form a compelling argument in favor of:

Accepted Answer

A)  free trade.
B)  protectionism.
C)  self-sufficiency.
D)  only exporting goods and not importing goods.E) B) and C)
F) All of the above

Question 15

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. For a worker in Country A, the trade-off of making one tomato is:

Accepted Answer

A)  2 bananas.
B)  3 bananas.
C)  4 bananas.
D)  5 bananas.E) A) and C)
F) A) and D)

Question 16

Refer to the figure shown, which represents the production possibilities frontiers (PPFs) for Countries A and B. The slope of Country A's PPF is _____ and the slope of Country B's PPF is _____.

Accepted Answer

A)  −5; −3
B)  −30; −3
C)  −1/5; −1/3
D)  1/5; 1/3E) A) and D)
F) A) and C)

Question 17

Suppose that a worker in Country A can make either 15 cars or 5 computers each year. Country A has 1,000 workers. Suppose a worker in Country B can make either 4 cars or 20 computers each year. Country B has 600 workers. _____ has a comparative advantage at producing cars, and _____ has a comparative advantage at producing computers.

Accepted Answer

A)  Country A; Country B
B)  Country B; Country A
C)  Country A; Country A
D)  Country B; Country BE) None of the above
F) C) and D)

Question 18

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

Accepted Answer

A)  caused the U.S. production possibilities frontier to shift inward.
B)  caused production possibilities to increase, since much work was needed to rebuild the city.
C)  caused the U.S. production possibilities frontier to bow inward.
D)  moved production from a point on the frontier to a point inside the frontier.E) B) and D)
F) B) and C)

Question 19

Why do people often choose to specialize and trade?

Accepted Answer

A)  It allows them to enjoy more goods than they can create on their own.
B)  They can consume a bundle of goods on their production possibilities frontier.
C)  It allows them to always produce at a point beyond their own production possibilities frontier.
D)  They can take advantage of another nation's poor choices.E) A) and D)
F) A) and C)

Question 20

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. Which of the following statements is true?

Accepted Answer

A)  The United States has an absolute advantage at producing both shoes and apples.
B)  Canada has an absolute advantage at producing both shoes and apples.
C)  The United States has an absolute advantage at producing shoes and Canada has an absolute advantage at producing apples.
D)  Canada has an absolute advantage at producing shoes and the United States has an absolute advantage at producing apples.E) All of the above
F) None of the above

Exam 2: Specialization and Exchange

Correct Answer
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Why do people often choose to specialize and trade?

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is true?Point A is unattainable.Point B is inefficient.Points A and D are inefficient.Points C and D are attainable.

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. Which of the following is a bundle of goods that Country B could potentially make?

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

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

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. Which of the following is true?

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could be produced?

Correct Answer
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Consider the production possibilities frontier in the figure shown. The opportunity cost of one cigar between points A and B is:

Correct Answer
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The concepts of comparative advantage, specialization, and trade form a compelling argument in favor of:

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

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. Which points are efficient and attainable with existing resources?

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

Correct Answer
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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. Which of the following statements is true?

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

Correct Answer
verified

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. What are their respective opportunity costs of one pair of gloves?

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. For a worker in Country A, the trade-off of making one tomato is:

Correct Answer
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Consider the production possibilities frontier in the figure shown. The opportunity cost of cars between points B and C is:

Correct Answer
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Refer to the figure shown, which represents the production possibilities frontiers (PPFs) for Countries A and B. The slope of Country A's PPF is _ and the slope of Country B's PPF is _.

Correct Answer
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Exam 2: Specialization and Exchange

Correct AnswerverifiedShow Answer

Why do people often choose to specialize and trade?

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is true?Point A is unattainable.Point B is inefficient.Points A and D are inefficient.Points C and D are attainable.

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 B could potentially make?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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 true?

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could be produced?

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier in the figure shown. The opportunity cost of one cigar between points A and B is:

Correct AnswerverifiedShow Answer

The concepts of comparative advantage, specialization, and trade form a compelling argument in favor of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. Which points are efficient and attainable with existing resources?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. Which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. What are their respective opportunity costs of one pair of gloves?

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. For a worker in Country A, the trade-off of making one tomato is:

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier in the figure shown. The opportunity cost of cars between points B and C is:

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers (PPFs) for Countries A and B. The slope of Country A's PPF is _____ and the slope of Country B's PPF is _____.

Correct AnswerverifiedShow Answer

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Refer to the figure shown, which represents the production possibilities frontiers (PPFs) for Countries A and B. The slope of Country A's PPF is _ and the slope of Country B's PPF is _.

Correct Answer
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