Question 1

France and England both produce wine and cloth under conditions of constant opportunity costs.France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine.England can produce 50 barrels of wine if it produces no cloth or 150 bolts of cloth if it produces no wine.When international trade takes place, each country specializes in the production of the good in which it has a comparative advantage-1 barrel of wine exchanges for 1 bolt of cloth-and France exports 50 units of wine.We can conclude that France produces ________
units of wine and ________ units of cloth and that France consumes units of wine and
________ units of cloth.
A.150; 100; 100; 100
B.150; 0; 100; 50
C.150; 0; 50; 50
D.0; 100; 50; 50

Accepted Answer

The answer of France and England both produce wine and...

Question 2

In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips.At which of these prices will trade occur between the two countries?
A.One ton of beef costs 20 boxes of tulips.
B.One ton of beef costs 5 boxes of tulips.
C.One ton of beef costs 12 boxes of tulips.
D.One ton of beef costs 8 boxes of tulips.

Accepted Answer

The answer of In a single year, the Netherlands can...

Question 3

The United States, at the point where it is currently producing, must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources.In this case, the opportunity cost of producing 5 SUVs is motorcycles.
A.5
B.20
C.100
D.75

Accepted Answer

The answer of The United States, at the point where...

Question 4

If the United States can produce 30 computers for every car it produces and Japan can produce 15 computers for every car it produces, we can conclude that:
A.the United States has the comparative advantage in car production.
B.Japan has the comparative advantage in car production.
C.the United States has the absolute advantage in car production.
D.Japan has the absolute advantage in car production.

Accepted Answer

The answer of If the United States can produce 30...

Question 5

If Japan, at the point where it is currently producing, must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is
________ computers.
A.4
B.12
C.71
D.79

Accepted Answer

The answer of If Japan, at the point where it...

Question 6

Saudi Arabia has a tremendous comparative advantage in petroleum.Which of the following is a source of this comparative advantage?
A.mild temperatures
B.large reserves of crude oil
C.no opportunity cost associated with oil production
D.high tariffs on oil from other nations

Accepted Answer

Saudi Arabia has a comparative advantage in petroleum because it has large reserves of crude oil. This means that it can produce oil at a lower cost than other countries, and therefore has a competitive advantage in the global oil market. Mild temperatures (A) do not provide any direct advantage for oil production, while no opportunity cost associated with oil production (C) is not true as there are other potential uses for resources used in oil production. High tariffs on oil from other nations (D) can be a protective measure for domestic producers, but it is not a source of comparative advantage.

Question 7

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at its current levels of production.Based on the information in the table, it is true that:
A.the opportunity cost of petroleum is less in the United States than in Mexico.
B.the opportunity cost of petroleum is more in the United States than in Mexico.
C.petroleum costs are the same in the United States and in Mexico.
D.machinery costs are the same in the United States and in Mexico.

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 8

Japan, at the point at which it is currently producing, must give up the production of 75 computers to produce 25 additional cellular telephones.Which of the following is the opportunity cost of producing 3 computers?
A.1 cellular telephone
B.3 cellular telephones
C.22 cellular telephones
D.28 cellular telephones

Accepted Answer

The answer of Japan, at the point at which it...

Question 9

The term autarky refers to a situation in which a country:
A.trades goods and services based upon the principle of comparative advantage.
B.trades goods and services based upon the principle of absolute advantage.
C.trades goods and services based upon the principle of Ricardian advantage.
D.does not trade with other countries.

Accepted Answer

The answer of The term autarky refers to a situation...

Question 10

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at all levels of production.The opportunity cost in Mexico of producing 105 units of petroleum is
________ units of machinery.
A.35
B.70
C.90
D.160

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 11

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at all levels of production.The opportunity cost in the United States of producing 40 units of machinery is
________ units of petroleum.
A.80
B.60
C.40
D.20

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 12

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum assuming constant costs at all levels of production.The opportunity cost in Mexico of producing 10 units of machinery is
________ units of petroleum.
A.30
B.90
C.180
D.270

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 13

The belief that trade must be bad for exporting countries because those workers are paid very low wages by our standards is the:
A.pauper labor fallacy.
B.sweatshop labor fallacy.
C.third-world country
D.fallacy.Nike fallacy.

Accepted Answer

The answer of The belief that trade must be bad...

Question 14

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at all levels of production.The opportunity cost in the United States of producing 30 units of petroleum is
________ units of machinery.
A.60
B.80
C.100
D.120

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 15

(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum.The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at its current level of production.Based on the information in the table, it is true that:
A.the opportunity cost of machinery is more in the United States than in Mexico.
B.machinery costs are the same in the United States and in Mexico.
C.the opportunity cost of machinery is less in the United States than in Mexico.
D.the opportunity cost of petroleum is less in the United States than in Mexico.

Accepted Answer

The answer of (Table: Production Possibilities for Machinery and Petroleum)...

Question 16

The United States can produce 30 computers for every car it produces, and Japan can produce 15 computers for every car it produces.Based on this information, which of the following statements is incorrect?
A.The United States should specialize in computer production.
B.Japan has the comparative advantage in car production.
C.There will be gains from trade if the United States exports computers to Japan.
D.Japan has an absolute advantage in car production.

Accepted Answer

The answer of The United States can produce 30 computers...

Question 17

Countries that engage in trade will tend to specialize in goods in which they have and will
________ those goods.
A.a comparative advantage; import
B.an absolute advantage; export
C.a comparative advantage; export
D.an economic profit; import

Accepted Answer

According to the principle of comparative advantage, countries should specialize in producing goods in which they have the lowest opportunity cost (comparative advantage) and trade those goods with other countries. By doing so, both countries can benefit by consuming a larger quantity of goods at a lower price than they would otherwise have been able to produce domestically. Therefore, countries that engage in trade will tend to specialize in goods in which they have a comparative advantage and will export those goods.

Question 18

The United States, at the point where it is currently producing, must give up the production of 300 motorcycles to produce 15 additional SUVs with the same resources.Which of the following is the opportunity cost of producing 100 motorcycles?
A.1 SUV
B.5 SUVs
C.7 SUVs
D.15 SUVs

Accepted Answer

The answer of The United States, at the point where...

Question 19

If the opportunity costs of production are constant, then the production possibility frontier is:
A.bowed out from the origin.
B.bowed in toward the origin.
C.a straight line.
D.circular.

Accepted Answer

A production possibility frontier with constant opportunity costs would be a straight line, since the opportunity cost of producing one good relative to the other remains the same. This is because resources are perfectly interchangeable in the production of the two goods.

Question 20

Taken collectively, people in nations that engage in international trade are not likely to:
A.consume more than they were able to consume in the absence of trade.
B.raise their standards of living.
C.gain from lower opportunity costs of production.
D.be made worse off.

Accepted Answer

The answer of Taken collectively, people in nations that engage...

Quiz 8: International Trade

The United States, at the point where it is currently producing, must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources.In this case, the opportunity cost of producing 5 SUVs is motorcycles. A.5 B.20 C.100 D.75

If Japan, at the point where it is currently producing, must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is ________ computers. A.4 B.12 C.71 D.79

Saudi Arabia has a tremendous comparative advantage in petroleum.Which of the following is a source of this comparative advantage? A.mild temperatures B.large reserves of crude oil C.no opportunity cost associated with oil production D.high tariffs on oil from other nations

The belief that trade must be bad for exporting countries because those workers are paid very low wages by our standards is the: A.pauper labor fallacy. B.sweatshop labor fallacy. C.third-world country D.fallacy.Nike fallacy.

Countries that engage in trade will tend to specialize in goods in which they have and will ________ those goods. A.a comparative advantage; import B.an absolute advantage; export C.a comparative advantage; export D.an economic profit; import

The United States, at the point where it is currently producing, must give up the production of 300 motorcycles to produce 15 additional SUVs with the same resources.Which of the following is the opportunity cost of producing 100 motorcycles? A.1 SUV B.5 SUVs C.7 SUVs D.15 SUVs

If the opportunity costs of production are constant, then the production possibility frontier is: A.bowed out from the origin. B.bowed in toward the origin. C.a straight line. D.circular.

Taken collectively, people in nations that engage in international trade are not likely to: A.consume more than they were able to consume in the absence of trade. B.raise their standards of living. C.gain from lower opportunity costs of production. D.be made worse off.