Question 1

Which of the following is not employed as an argument in support of trade restrictions?

Accepted Answer

A)   Free trade harms the national security if vital products are imported.
B)   Free trade is harmful to importing countries if foreign countries subsidize their exporting industries.
C)   Free trade destroys domestic jobs.
D)   Free trade harms both domestic producers and domestic consumers and therefore reduces total surplus.
E)   Free trade harms infant industries in an importing country.F) B) and E)
G) All of the above

Question 2

Suppose the world consists of two countries: Germany and Spain. Further, suppose there are only two goods, food and clothing. Which of the following statements is true?

Accepted Answer

A)   If Germany has an absolute advantage in the production of food, then Spain must have an absolute advantage in the production of clothing.
B)   none of these answers.
C)   If Germany has a comparative advantage in the production of food, Spain might also have a comparative advantage in the production of food.
D)   If Germany has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
E)   If Germany has a comparative advantage in the production of food, then Spain must have a comparative advantage in the production of clothing.F) A) and B)
G) D) and E)

Question 3

Exhibit 1  ​ Refer to Exhibit 1. If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is

Accepted Answer

A)   40 units of eggs.
B)   10 units of eggs.
C)   20 units of eggs.
D)   30 units of eggs.
E)   50 units of eggs.F) A) and C)
G) C) and E)

Question 4

Economic growth is depicted by a:

Accepted Answer

A)   shift in the production possibilities frontier outward.
B)   movement from inside the curve toward the curve.
C)   shift in the production possibilities frontier inward.
D)   movement along a production possibilities frontier toward capital goods.E) A) and C)
F) A) and B)

Question 5

Exhibit 1 
-Refer to Exhibit 1. As we move from point A to point D,

Accepted Answer

A)   the opportunity cost of eggs in terms of bacon falls.
B)   the opportunity cost of eggs in terms of bacon rises.
C)   the opportunity cost of eggs in terms of bacon is constant.
D)   the economy becomes less efficient.
E)   the economy becomes more efficient.F) A) and E)
G) A) and D)

Question 6

Which of the following statements about a tariff is true?

Accepted Answer

A)   A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and increases total surplus.
B)   A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and reduces total surplus.
C)   A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus.
D)   A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and increases total surplus.E) A) and C)
F) A) and B)

Question 7

Exhibit 1 
- Refer to Exhibit 1. Point F represents a combination of production that:

Accepted Answer

A)   is a more equitable output level of both bacon and eggs
B)   can be reached if we reduce the production of eggs by 20 units.
C)   can be reached if there is a sufficient advance in technology.
D)   is inefficient because there are unemployed resources.E) C) and D)
F) A) and D)

Question 8

All points on a production possibilities frontier show the

Accepted Answer

A)   maximum satisfaction that households receive from their purchases of goods.
B)   minimum quantities of resources that must be used to produce a given quantity of output.
C)   maximum output that society can produce with given resources and technology.
D)   minimum output that society can produce with given resources and technology.E) C) and D)
F) A) and B)

Question 9

If trade benefits one country, its trading partner must be worse off due to trade.

Accepted Answer

A) True 
 B)False

Question 10

Points outside the production possibilities frontier are attainable but inefficient.

Accepted Answer

A) True 
 B)False

Question 11

Comparative advantage is a comparison based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 12

Table 1 shows the units of output a worker can produce per month in Australia and Korea. ?
  Food  Electronics  Australia 205 Korea 82\begin{array}{|l|l|l|}\hline & 	ext { Food } & 	ext { Electronics } \\hline 	ext { Australia } & 20 & 5 \\hline 	ext { Korea } & 8 & 2 \\hline\end{array} Australia  Korea ​ Food 208​ Electronics 52​​ 
?
Refer to table 1. The opportunity cost of 1 unit of electronics in Korea is

Accepted Answer

A)   4 units of food.
B)   1/4 units of food.
C)   2 units of food.
D)   1/2 of a unit of food. E) A) and C)
F) All of the above

Question 13

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade, the domestic price of 1 ring is

Accepted Answer

A)   1/4 of a watch.
B)   3 watches.
C)   1/3 of a watch.
D)   12 watches.
E)   4 watches.F) B) and D)
G) A) and B)

Question 14

The production possibilities frontier demonstrates the basic economic principle that:

Accepted Answer

A)   economies are always efficient.
B)   assuming full employment, supply will always determine demand.
C)   assuming full employment, an economy is efficient only when the production of capital goods in a particular year is greater than the production of consumption goods in that year.
D)   assuming full employment, to produce more of any one thing, the economy must produce less of at least one other good.E) B) and C)
F) C) and D)

Question 15

Which of the following statements about trade is true?

Accepted Answer

A)   Unrestricted international trade benefits every person in a country equally.
B)   Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.
C)   People that are skilled at all activities cannot benefit from trade because they do not have an opportunity cost in production.
D)   Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage.E) All of the above
F) B) and D)

Question 16

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.
Alpha's Production Possibilities Frontier
 
Omega's Production Possibilities Frontier  
a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A. How much of each good would the countries produce?
b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts?
c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now?
d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the graphs the gain each country would receive from trade. Label these points B.

Accepted Answer

Alpha's Production Possibilities Frontie...

Exam 19: Interdependence and the Gains From Trade

Exhibit 1 - Refer to Exhibit 1. Point F represents a combination of production that:

Correct Answer
verified

Exhibit 1 -Refer to Exhibit 1. As we move from point A to point D,

Correct Answer
verified

Suppose the world consists of two countries: Germany and Spain. Further, suppose there are only two goods, food and clothing. Which of the following statements is true?

Correct Answer
verified

If trade benefits one country, its trading partner must be worse off due to trade.

Correct Answer
verified

Which of the following statements about trade is true?

Correct Answer
verified

Which of the following statements about a tariff is true?

Correct Answer
verified

Comparative advantage is a comparison based on opportunity cost.

Correct Answer
verified

Exhibit 1 Refer to Exhibit 1. If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is

Correct Answer
verified

Correct Answer
verified
Alpha's Production Possibilities Frontie...
View Answer

The production possibilities frontier demonstrates the basic economic principle that:

Correct Answer
verified

Which of the following is not employed as an argument in support of trade restrictions?

Correct Answer
verified

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade, the domestic price of 1 ring is

Correct Answer
verified

All points on a production possibilities frontier show the

Correct Answer
verified

Correct Answer
verified

Economic growth is depicted by a:

Correct Answer
verified

Points outside the production possibilities frontier are attainable but inefficient.

Correct Answer
verified

Exam 19: Interdependence and the Gains From Trade

Exhibit 1 - Refer to Exhibit 1. Point F represents a combination of production that:

Correct AnswerverifiedShow Answer

Exhibit 1 -Refer to Exhibit 1. As we move from point A to point D,

Correct AnswerverifiedShow Answer

Suppose the world consists of two countries: Germany and Spain. Further, suppose there are only two goods, food and clothing. Which of the following statements is true?

Correct AnswerverifiedShow Answer

If trade benefits one country, its trading partner must be worse off due to trade.

Correct AnswerverifiedShow Answer

Which of the following statements about trade is true?

Correct AnswerverifiedShow Answer

Which of the following statements about a tariff is true?

Correct AnswerverifiedShow Answer

Comparative advantage is a comparison based on opportunity cost.

Correct AnswerverifiedShow Answer

Exhibit 1 ​ Refer to Exhibit 1. If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAlpha's Production Possibilities Frontie...View AnswerShow Answer

The production possibilities frontier demonstrates the basic economic principle that:

Correct AnswerverifiedShow Answer

Which of the following is not employed as an argument in support of trade restrictions?

Correct AnswerverifiedShow Answer

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade, the domestic price of 1 ring is

Correct AnswerverifiedShow Answer

All points on a production possibilities frontier show the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic growth is depicted by a:

Correct AnswerverifiedShow Answer

Points outside the production possibilities frontier are attainable but inefficient.

Correct AnswerverifiedShow Answer

Correct Answer
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Exhibit 1 Refer to Exhibit 1. If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is

Correct Answer
verified

Correct Answer
verified
Alpha's Production Possibilities Frontie...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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