Question 1

The relationship between trade and specialization is best characterized as follows:

Accepted Answer

A)  Trade decreases specialization,which in turn increases the demand for trade. 
B)  Trade decreases specialization,which in turn decreases the demand for trade. 
C)  Trade increases specialization,which in turn increases the demand for trade. 
D)  Trade increases specialization,which in turn decreases the demand for trade. 
A)  Trade decreases specialization,which in turn increases the demand for trade. 
B)  Trade decreases specialization,which in turn decreases the demand for trade. 
C)  Trade increases specialization,which in turn increases the demand for trade. 
D)  Trade increases specialization,which in turn decreases the demand for trade.

Question 2

Utilizing comparative advantage can best be exemplified as:

Accepted Answer

A)  your lawyer word-processing her own legal briefs. 
B)  the CEO of Microsoft programming his own computer. 
C)  the president of your university teaching a class again. 
D)  a world-renowned chef hiring someone to cook meals for his family. 
A)  your lawyer word-processing her own legal briefs. 
B)  the CEO of Microsoft programming his own computer. 
C)  the president of your university teaching a class again. 
D)  a world-renowned chef hiring someone to cook meals for his family.

Question 3

Gains from trade are largest when two parties are similar in terms of preferences.

Accepted Answer

A) True 
 B)False

Question 4

Conan O'Brien hosts the Conan show and Andy Richter,his sidekick,writes for it.Conan needs 4 hours to rehearse and host a good show.It takes Andy 10 hours to do the same.Conan writes one usable joke in an hour,but Andy needs 2 hours to do the same.Gains from trade are largest when Conan hosts the show and Andy writes for the show.

Accepted Answer

A) True 
 B)False

Question 5

The production possibilities frontier shows:

Accepted Answer

A)  the combinations of outputs a country can produce given its resources and productivity. 
B)  the combinations of inputs that a country has given its outputs and productivity. 
C)  the combinations of outputs and resources that a country possesses given its productivity. 
D)  the maximum level of a country's productivity given its resources and outputs. 
A)  the combinations of outputs a country can produce given its resources and productivity. 
B)  the combinations of inputs that a country has given its outputs and productivity. 
C)  the combinations of outputs and resources that a country possesses given its productivity. 
D)  the maximum level of a country's productivity given its resources and outputs.

Question 6

What is the difference between trade among individuals and trade among nations?

Accepted Answer

A)  The logic of trade and specialization is stronger for individuals than it is for nations. 
B)  The logic of trade and specialization is stronger for nations than it is for individuals. 
C)  The logic of trade and specialization applies equally well among individuals and nations. 
D)  Without looking at specific cases,we can't say much about the logic of trade and specialization for individuals and nations. 
A)  The logic of trade and specialization is stronger for individuals than it is for nations. 
B)  The logic of trade and specialization is stronger for nations than it is for individuals. 
C)  The logic of trade and specialization applies equally well among individuals and nations. 
D)  Without looking at specific cases,we can't say much about the logic of trade and specialization for individuals and nations.

Question 7

Use the following to answer questions 
Figure: PPF Mexico & United States  
-(Figure: PPF Mexico & United States)Use the above figure in which both Mexico and the United States each have 24 units of labor.Mexico has a comparative advantage in ______ and the United States has a comparative advantage in ______.

Accepted Answer

A)  computers;shirts 
B)  shirts;computers 
C)  computers;computers 
D)  shirts;shirts 
A)  computers;shirts 
B)  shirts;computers 
C)  computers;computers 
D)  shirts;shirts

Question 8

Globalization is best described as:

Accepted Answer

A)  a new process. 
B)  an old process that has consistently grown. 
C)  an old process that has grown intermittently. 
D)  an old process that has declined over time. 
A)  a new process. 
B)  an old process that has consistently grown. 
C)  an old process that has grown intermittently. 
D)  an old process that has declined over time.

Question 9

According to the theory of comparative advantage,a country should specialize in producing a good that involves:

Accepted Answer

A)  more inputs than those in other countries. 
B)  fewer inputs than those in other countries. 
C)  a higher opportunity cost than that of other countries. 
D)  a lower opportunity cost than that of other countries. 
A)  more inputs than those in other countries. 
B)  fewer inputs than those in other countries. 
C)  a higher opportunity cost than that of other countries. 
D)  a lower opportunity cost than that of other countries.

Question 10

Use the following to answer questions 
Figure: PPF Nickel & Textiles  
-(Figure: PPF Nickel & Textiles)Refer to the figure.How many tons of textiles does Australia give up to produce one ton of nickel?

Accepted Answer

A)  1/3 
B)  1/2 
C)  2 
D)  3 
A)  1/3 
B)  1/2 
C)  2 
D)  3

Question 11

High-productivity workers fear trade because they think they cannot compete with workers in low-productivity countries.Low-productivity workers fear trade because they think they cannot compete with workers in high-productivity countries.Which of these fears is justified?

Accepted Answer

A)  The fears of workers in high-productivity countries are justified;the fears of workers in low-productivity countries are not. 
B)  The fears of workers in low-productivity countries are justified;the fears of workers in high-productivity countries are not. 
C)  Both sets of fears are justified. 
D)  Neither set of fears is justified. 
A)  The fears of workers in high-productivity countries are justified;the fears of workers in low-productivity countries are not. 
B)  The fears of workers in low-productivity countries are justified;the fears of workers in high-productivity countries are not. 
C)  Both sets of fears are justified. 
D)  Neither set of fears is justified.

Question 12

Use the following to answer questions 
Figure: PPF Nickel & Textiles  
-(Figure: PPF Nickel & Textiles)Refer to the figure.What is the maximum amount of textiles China can produce?

Accepted Answer

A)  10 tons 
B)  8 tons 
C)  6 tons 
D)  4 tons 
A)  10 tons 
B)  8 tons 
C)  6 tons 
D)  4 tons

Question 13

Knowledge increases ____________ and specialization __________ total output.

Accepted Answer

A)  education;decreases 
B)  productivity;increases 
C)  perception;increases 
D)  economies of scale;decreases 
A)  education;decreases 
B)  productivity;increases 
C)  perception;increases 
D)  economies of scale;decreases

Question 14

A country has a comparative advantage in producing one good if its labor cost is lower than that for other countries.

Accepted Answer

A) True 
 B)False

Question 15

Anita is a wonderful baker and can bake 10 cakes in a day,but then has no time left to make cookies.If she bakes only cookies,she can make 200 cookies in a day.John can make equally delicious cakes and cookies but can only make seven cakes or 100 cookies in a day.Based on this information,which of the following statements is true?

Accepted Answer

A)  Anita has the comparative advantage in the production of cakes. 
B)  John has the comparative advantage in the production of cakes. 
C)  John has the absolute advantage in the production of cookies. 
D)  Anita has the comparative advantage in the production of both cakes and cookies. 
A)  Anita has the comparative advantage in the production of cakes. 
B)  John has the comparative advantage in the production of cakes. 
C)  John has the absolute advantage in the production of cookies. 
D)  Anita has the comparative advantage in the production of both cakes and cookies.

Question 16

Trade works best between people who share similar preferences.

Accepted Answer

A) True 
 B)False

Question 17

If each of us had to grow all of our own food:

Accepted Answer

A)  civilization would collapse and billions of people would starve. 
B)  we would have more time for other pursuits. 
C)  people would be richer since they would no longer have to spend money on groceries. 
D)  the total amount of knowledge in society would increase since everyone would have to learn about farming. 
A)  civilization would collapse and billions of people would starve. 
B)  we would have more time for other pursuits. 
C)  people would be richer since they would no longer have to spend money on groceries. 
D)  the total amount of knowledge in society would increase since everyone would have to learn about farming.

Question 18

Which of the following situations would lead to more starvation?

Accepted Answer

A)  a world where everyone grows his or her own food and there is no trade 
B)  a world with trade and lots of specialization 
C)  a world with immense division of knowledge 
D)  a world where only some people specialize in food and everyone else produces something else 
A)  a world where everyone grows his or her own food and there is no trade 
B)  a world with trade and lots of specialization 
C)  a world with immense division of knowledge 
D)  a world where only some people specialize in food and everyone else produces something else

Question 19

Specialization in its comparative advantage and trading with other nations benefits a country in terms of its total output,but not individuals when it comes to their wages.

Accepted Answer

A) True 
 B)False

Question 20

If Joyce can gather 15 logs a day or catch 10 fish a day and Percy can gather five logs a day or catch five fish a day,then Percy has a comparative advantage in gathering fish.

Accepted Answer

A) True 
 B)False

The relationship between trade and specialization is best characterized as follows:

Utilizing comparative advantage can best be exemplified as:

Gains from trade are largest when two parties are similar in terms of preferences.

The production possibilities frontier shows:

What is the difference between trade among individuals and trade among nations?

Use the following to answer questions Figure: PPF Mexico & United States -(Figure: PPF Mexico & United States)Use the above figure in which both Mexico and the United States each have 24 units of labor.Mexico has a comparative advantage in and the United States has a comparative advantage in .

Globalization is best described as:

According to the theory of comparative advantage,a country should specialize in producing a good that involves:

Use the following to answer questions Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles)Refer to the figure.How many tons of textiles does Australia give up to produce one ton of nickel?

High-productivity workers fear trade because they think they cannot compete with workers in low-productivity countries.Low-productivity workers fear trade because they think they cannot compete with workers in high-productivity countries.Which of these fears is justified?

Use the following to answer questions Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles)Refer to the figure.What is the maximum amount of textiles China can produce?

Knowledge increases __ and specialization total output.

A country has a comparative advantage in producing one good if its labor cost is lower than that for other countries.

Trade works best between people who share similar preferences.

If each of us had to grow all of our own food:

Which of the following situations would lead to more starvation?

Specialization in its comparative advantage and trading with other nations benefits a country in terms of its total output,but not individuals when it comes to their wages.

If Joyce can gather 15 logs a day or catch 10 fish a day and Percy can gather five logs a day or catch five fish a day,then Percy has a comparative advantage in gathering fish.

The Big Ideas

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 2: The Power of Trade

The relationship between trade and specialization is best characterized as follows:

Utilizing comparative advantage can best be exemplified as:

Gains from trade are largest when two parties are similar in terms of preferences.

The production possibilities frontier shows:

What is the difference between trade among individuals and trade among nations?

Globalization is best described as:

According to the theory of comparative advantage,a country should specialize in producing a good that involves:

Use the following to answer questions Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles)Refer to the figure.How many tons of textiles does Australia give up to produce one ton of nickel?

High-productivity workers fear trade because they think they cannot compete with workers in low-productivity countries.Low-productivity workers fear trade because they think they cannot compete with workers in high-productivity countries.Which of these fears is justified?

Use the following to answer questions Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles)Refer to the figure.What is the maximum amount of textiles China can produce?

Knowledge increases ____________ and specialization __________ total output.

A country has a comparative advantage in producing one good if its labor cost is lower than that for other countries.

Trade works best between people who share similar preferences.

If each of us had to grow all of our own food:

Which of the following situations would lead to more starvation?

Specialization in its comparative advantage and trading with other nations benefits a country in terms of its total output,but not individuals when it comes to their wages.

If Joyce can gather 15 logs a day or catch 10 fish a day and Percy can gather five logs a day or catch five fish a day,then Percy has a comparative advantage in gathering fish.

The Big Ideas

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Knowledge increases __ and specialization total output.