Question 1

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. If Country A were to divide its resources equally, it could produce:

Accepted Answer

A)   30 cars and 6 trucks.
B)   25 cars and 5 trucks.
C)   15 cars and 3 trucks.
D)   10 cars and 4 trucks.E) B) and C)
F) A) and B)

Question 2

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. After looking at the production possibilities for both Tom and Jerry, we can surmise that:

Accepted Answer

A)   Tom has the absolute advantage in the production of both dishes and fences.
B)   Jerry has the absolute advantage in the production of both dishes and fences.
C)   Tom has the absolute advantage in the production of dishes and Jerry has the absolute advantage in fence production.
D)   Tom has the absolute advantage in the production of fences and Jerry has the absolute advantage in dish production.E) A) and D)
F) A) and C)

Question 3

Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could not be produced?

Accepted Answer

A)   (20 watermelons, 400 bushels of apples) 
B)   (15 watermelons, 100 bushels of apples) 
C)   (10 watermelons, 150 bushels of apples) 
D)   (0 watermelons, 400 bushels of apples) E) C) and D)
F) None of the above A

Question 4

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 opportunity cost of one tomato in Country B is:

Accepted Answer

A)   108 bananas.
B)   18 bananas.
C)   6 bananas.
D)   3 bananas.E) A) and C)
F) B) and C)

Question 5

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. The opportunity cost of one fence is _______ for Tom and ________ for Jerry. Therefore Tom should specialize in ______________.

Accepted Answer

A)   4 dishes; 2 dishes; dishes
B)   16 dishes; 14 dishes; dishes
C)   4 dishes; 2 dishes; fences
D)   16 dishes; 14 dishes; fencesE) C) and D)
F) A) and B)

Question 6

The slope of a production possibilities frontier measures:

Accepted Answer

A)   the opportunity cost of producing one good in terms of the other good.
B)   the trade-off in the consumption of one good versus the other good
C)   how much of the resources must be used in order to produce one the goods.
D)   inefficient production of a good.E) A) and B)
F) None of the above

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. Jerry has a comparative advantage in:

Accepted Answer

A)   dish production because he has the lower opportunity cost of a dishes.
B)   dish production because he has the higher opportunity cost of a dishes.
C)   fence production because he has the lower opportunity cost of a fence.
D)   fence production because he has the higher opportunity cost of a fence.E) A) and C)
F) B) and C)

Question 8

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. After looking at the production possibilities for both Tom and Jerry, we can conclude that:

Accepted Answer

A)   Tom has the comparative advantage in dish production.
B)   Jerry has the comparative advantage in dish production.
C)   Tom has the comparative advantage in fence production.
D)   No comparative advantage exists.E) All of the above
F) None of the above

Question 9

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. For Tom, the opportunity cost of building a fence is __________ dishes made.

Accepted Answer

A)   16
B)   12
C)   8
D)   4E) A) and D)
F) B) and C) D

Question 10

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

Accepted Answer

A)   shift in.
B)   shift out.
C)   not move until society chooses to move it.
D)   become more meaningful in policy decisions.E) A) and D)
F) All of the above

Question 11

Suppose the figure shown represents the production possibilities frontier for Country A Country B offers to trade four trucks for every airplane. Assuming Country A specializes in airplane production, which of the following combinations of goods could Country A consume?

Accepted Answer

A)   (15 airplanes, 20 trucks) 
B)   (10 airplanes, 20 trucks) 
C)   (10 airplanes, 30 trucks) 
D)   (5 airplanes, 20 trucks) E) C) and D)
F) All of the above

Question 12

We say that a country completely specializes in production when it spends all of its resources producing:

Accepted Answer

A)   a particular good.
B)   those goods it has an absolute advantage in producing.
C)   only what other countries need.
D)   what it can make more of than anyone else.E) C) and D)
F) B) and C)

Question 13

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, Jerry could have produced:

Accepted Answer

A)   14 dishes and 7 fences.
B)   12 dishes and 6 fences.
C)   10 dishes and 5 fences.
D)   6 dishes and 4 fences.E) A) and B)
F) A) and C)

Question 14

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Which of the following statements can be said of Country A? Country A:

Accepted Answer

A)   has the comparative advantage in car production only.
B)   has the comparative advantage in truck production only.
C)   has the comparative advantage in car and truck production.
D)   does not possess the comparative advantage in either good.E) A) and B)
F) A) and C) A

Question 15

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is currently true?

Accepted Answer

A)   Producing at point A is the best choice, because some of both items are made.
B)   Producing at point D would be inefficient, since no books would be produced.
C)   Producing at point C is the best choice, because it's closest to the middle.
D)   Producing at point B is impossible.E) B) and D)
F) A) and B)

Question 16

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 a comparative advantage in the production of shoes.
B)   Canada has a comparative advantage in the production of shoes.
C)   Comparative advantage doesn't exist in this scenario.
D)   Both countries have a comparative advantage in the production of shoes.E) All of the above
F) A) and C)

Question 17

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 production possibilities frontier of the United States to shift in.
B)   caused the production possibilities to increase, since it created a lot of work to rebuild the city affected areas.
C)   caused the production possibilities frontier of the United States to shift.
D)   didn't change the production possibilities frontier, but moved from a point on the frontier to a point inside the frontier.E) B) and D)
F) A) and B)

Question 18

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

Question 19

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, Tom could have:

Accepted Answer

A)   (16 dishes, 4 fences)  or (8 dishes, 2 fences) .
B)   (8 dishes, 2 fences) , or (4 dishes, 6 fences) .
C)   (8 dishes, 2 fences) , or (4 dishes, 3 fences) .
D)   (12 dishes, 3 fences) , or (8 dishes, 3 fences) .E) A) and D)
F) None of the above

Question 20

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. Using the concept of absolute advantage, which of the following statements is true? The United States:

Accepted Answer

A)   has the absolute advantage in the production of both gloves and radishes.
B)   does not have the absolute advantage in the production of either gloves or radishes.
C)   has the absolute advantage in the production of gloves, but not radishes.
D)   has the absolute advantage in the production of radishes, but not gloves.E) C) and D)
F) All of the above

Exam 2: Specialization and Exchange

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. If Country A were to divide its resources equally, it could produce:

Correct Answer
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Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could not be produced?

Correct Answer
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A

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 opportunity cost of one tomato in Country B is:

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The slope of a production possibilities frontier measures:

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D

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

Correct Answer
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Suppose the figure shown represents the production possibilities frontier for Country A Country B offers to trade four trucks for every airplane. Assuming Country A specializes in airplane production, which of the following combinations of goods could Country A consume?

Correct Answer
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We say that a country completely specializes in production when it spends all of its resources producing:

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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Which of the following statements can be said of Country A? Country A:

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A

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is currently true?

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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?

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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:

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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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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. Using the concept of absolute advantage, which of the following statements is true? The United States:

Correct Answer
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Exam 2: Specialization and Exchange

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. If Country A were to divide its resources equally, it could produce:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider the production possibilities frontier displayed in the figure shown. Which of the following combinations could not be produced?

Correct AnswerverifiedA

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 opportunity cost of one tomato in Country B is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The slope of a production possibilities frontier measures:

Correct AnswerverifiedShow Answer

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Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Suppose the figure shown represents the production possibilities frontier for Country A Country B offers to trade four trucks for every airplane. Assuming Country A specializes in airplane production, which of the following combinations of goods could Country A consume?

Correct AnswerverifiedShow Answer

We say that a country completely specializes in production when it spends all of its resources producing:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Which of the following statements can be said of Country A? Country A:

Correct AnswerverifiedA

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is currently true?

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

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

Correct AnswerverifiedShow Answer

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. Using the concept of absolute advantage, which of the following statements is true? The United States:

Correct AnswerverifiedShow Answer

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A

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D

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A

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