Deck 2: The Power of Trade and Comparative

Question 1

Division of knowledge refers to:

A) dividing tasks into different subtasks and having one person perform all these subtasks.
B) people learning different tasks in which they specialize.
C) assigning one person to learn all the different ways to perform the same task.
D) limiting what each person knows about another person.

Answer 1

B

Question 2

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

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.

Answer 2

A

Question 3

Trade creates value because:

A) people get what they want.
B) raw materials are transformed into finished products.
C) people exchange things they do not want for things they do.
D) idle resources are put to use.

Answer 3

C

Question 4

Mark values his drum set at $800 and Ella values her guitar at $1,000. Suppose that Mark trades his drum set for Ella's guitar.

A) This trade makes Ella worse off by $200.
B) This trade makes Mark better off by $200.
C) Mark must value Ella's guitar for at least $800, and Ella must value Mark's drum set for at least $1,000.
D) This trade decreases total value by moving the guitar and drum away from people who placed a high value on them.

Question 5

Which of the following is least likely a consequence of the division of knowledge?

A) The development of the computer tablet.
B) A totally self-sufficient family farm.
C) A new delivery method for cancer-fighting drugs.
D) The provision of a new bike path in your community.

Question 6

The United States and the European Union are groups of semi-independent states that have come together under an agreement whereby resources can travel freely across borders and a common currency is in use. Which of the following statements best explains how this allows for the achievement of economies of scale?

A) Each state or country can now target larger markets and can thus earn more export revenue.
B) States and countries no longer have to worry about borders impeding trade.
C) Each state or country can adopt large-scale production techniques that allow lower per-unit costs of production.
D) The removal of trade borders and a common currency enhances trade between member states.

Question 7

Which of the following situations would lead to more starvation?

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 8

David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true?

A) David and Cameron must have different preferences for the car.
B) This trade did not create value because Cameron is buying a car that David considers worthless.
C) Cameron is the only one made better off by the trade.
D) David is made better off by the trade, but Cameron is made worse off.

Question 9

Knowledge increases ____________ and specialization __________ total output.

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

Question 10

Only a very small portion of people who use microwaves know how they work. This is an example of:

A) a production possibility frontier.
B) division of knowledge.
C) absolute advantage.
D) opportunity cost.

Question 11

The main reason why specialization can raise productivity is that:

A) knowledge in human brains is limited.
B) some persons have more knowledge than others.
C) it is always good to know less than more.
D) it is impossible to learn anything well.

Question 12

Each of 100 people receives a random item from a grocery store and assigns it a value between 1 (low) and 10 (high). They trade those items among themselves for items they prefer rather than those they randomly received and then assign a second value (again, 1 to 10) to the item that they end up with after the trading concludes. How would the sum of those values before trading compare with the sum after trading?

A) The value would stay the same because no new goods were introduced.
B) The value would stay the same because no one has a comparative advantage.
C) After trading, value would be lower because no one can specialize.
D) After trading, value would be higher because preferences are diverse.

Question 13

If instead of specialized doctors (neurologists, cardiologists, gastroenterologists, etc.) we had doctors who each knew the same things about all aspects of medicine, it would be:

A) better because then we could just go to one doctor with no loss of quality in medical care.
B) better because total medical knowledge in society would increase.
C) worse because the human brain is limited.
D) worse because total medical knowledge in society would decrease.

Question 14

Trade makes people better off when:

A) everyone wants the same things as other people.
B) some people are less productive than others.
C) people cannot specialize in certain activities.
D) people have different preferences.

Question 15

Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because:

A) the World Rose Commission coordinates the different elements of the rose industry.
B) markets coordinate the specialization and trade necessary for the flower industry to function.
C) of the trade agreement between the governments of Kenya and Amsterdam.
D) customers are willing to pay more for roses that pass through Amsterdam.

Question 16

Economic growth in the modern era is primarily due to the:

A) increases in the number of people.
B) increases in money.
C) defining of nation borders.
D) creation of new knowledge.

Question 17

eBay creates value by:

A) helping sellers trick buyers into purchasing broken items.
B) moving goods like broken laser pointers from people who don't want them to people who do.
C) helping people with the same preferences find each other.
D) moving toys from children who want them to children who don't.

Question 18

Facilitators of trade (such as Pierre Omidyar, the developer of eBay):

A) may become very rich since they are creating value for many individuals.
B) find it very hard to profit from their services since they are not directly involved in the trades.
C) typically only profit from their services if they are able to obtain government patent rights.
D) are usually seen as taking advantage of consumers.

Question 19

Specialization and trade can _____ the per-unit cost of production because _____ .

A) decrease; it allows for more small-scale production.
B) decrease; it creates economies of scale associated with large-scale production
C) increase; it requires more expensive, specialized equipment
D) increase; more expensive labor is needed.

Question 20

One of the outcomes of specialization is that it leads to _____, which _____ the average cost of production.

A) smaller-scale production; lowers
B) smaller-scale production; raises
C) larger-scale production; raises
D) larger-scale production; lowers

Question 21

Fourteenth-century potters in the Chinese city of Jingdezhen developed the technology to heat a kiln at 1,300 degrees Celsius and produce porcelain, or "china," which was particularly popular in Persia where the Koran forbade serving food on gold or silver and wealthy families were anxious for a legal way to impress their dinner guests. The potters also imported Persian cobalt to create the blue dye for the porcelain (local cobalt was not as bold in color). Which advantage(s) from trade is(are) illustrated in this passage?

A) differences in preferences
B) specialization
C) comparative advantage
D) The passage illustrates all of these advantages.

Question 22

Absolute advantage derives from which of the following?

A) the lowest cost of production
B) the most suitable climate
C) the least expensive labor force
D) the best educated labor force

Question 23

Suppose a famous baseball player, Alex Rodriguez, hires a high school student to paint his house. Which of the following is most likely TRUE?

A) The opportunity cost of painting a house is higher for Alex Rodriguez than for the high school student.
B) The opportunity cost of painting a house is lower for Alex Rodriguez than for the high school student.
C) The opportunity cost of painting a house is the same for Alex Rodriguez as for the high school student.
D) The opportunity cost of painting a house is zero for Alex Rodriguez and is negative for the high school student.

Question 24

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

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 25

Which of the following best describes the principle of comparative advantage?

A) Some people can produce the same good better than other producers can.
B) Someone has the ability to produce the same good using fewer inputs than another producer.
C) Someone has the ability to produce the same good for the lowest opportunity cost.
D) To produce more of one good, people have to produce less of another good.

Question 26

Economies can grow due to:

A) the extent to which all individuals are educated in all areas of production.
B) government policies.
C) the extent to which markets facilitate specialization through trade.
D) barriers to trade that promote the growth of domestic markets.

Question 27

Which of the following statements is TRUE?
I. Compared with a modern economy, the division of knowledge is greater in a primitive economy because every family is self-sufficient: growing their own food, making their own clothes, and constructing their own shelter.
II. Nobody understands the entire process of producing even the simplest products, like a lead pencil, in a modern economy.
III. The collapse of communism and the opening of the Chinese economy to the rest of the world have increased the division of knowledge, leading to increased world output.

A) I only
B) III only
C) II and III only
D) I, II, and III

Question 28

A rock carving from ancient Norway depicts two identical people doing different jobs in the same boat: one uses a bow to hunt while the other paddles. How does this early example illustrate the benefits of trade?

A) One prefers to hunt while the other prefers to paddle the boat; this is an example of diverse preferences.
B) One learns to be very good at paddling and one learns to be very good at hunting; this is an example of specialization and division of knowledge.
C) The paddler is stronger than the hunter so the paddler sacrifices a lot by hunting; this is an example of comparative advantage.
D) There is no trade in this example since no goods are being exchanged.

Question 29

Without trade, the knowledge used by an entire economy would be about the same as the knowledge had by:

A) all intelligent people combined.
B) a large number of people.
C) one person.
D) no one.

Question 30

Which of the following is typically a result of the division of knowledge?

A) The society runs with the knowledge of a few persons.
B) Each person has the same knowledge as everyone else.
C) Labor productivity is higher..
D) No one specializes in any activity.

Question 31

Utilizing comparative advantage can best be exemplified as:

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 32

Which of the following best explains the term "specialization" with respect to trade?

A) Specialization occurs when a people concentrate their productive resources on the goods and services they can produce most efficiently.
B) Specialization occurs when one person can produce more of a particular good than another person.
C) Specialization refers to the absolute advantage that a person enjoys in the production of goods and services.
D) Specialization refers to the ability of a person to produce more of a good than his or her trading partners.

Question 33

Why do people specialize?

A) Specialization increases productivity.
B) Specialization decreases people's dependence on one another.
C) People become self-sufficient when they specialize.
D) Most people only know how to do a few tasks.

Question 34

Owen Wilson is an actor who has acted in many action comedy films. In contrast, Tom Cruise has acted in many serious action films. How might the theory of specialization be applied to them?

A) Owen Wilson has fully specialized in action comedy movies while Tom Cruise has fully specialized in serious action movies.
B) Due to filmography protectionism, Owen Wilson is unable to secure serious action roles, and Tom Cruise is unable to secure action comedy roles.
C) Casting directors see Owen Wilson as relatively better at action comedy roles and Tom Cruise as relatively better at serious action roles and cast them accordingly.
D) Owen Wilson does not have the talent necessary to act in more serious films.

Question 35

Trade barriers like the Berlin Wall:

A) increased the number of scientists and engineers.
B) added billions of minds to the global division of knowledge.
C) decreased innovation and global cooperation.
D) prevented restrictive monopolistic practices.

Question 36

The ability of one producer to produce one good or service using fewer inputs than another producer is:

A) comparative advantage.
B) absolute advantage.
C) opportunity cost.
D) competition.

Question 37

The enormous variety of goods and services that we consume each day can be attributed mainly to:

A) government regulations.
B) home production.
C) specialization and trade.
D) early craftsmen handing down their knowledge.

Question 38

Jesse is good at math and excellent at making friends and Addae is equally good at both. Mathematically and socially challenged Jordan wants to hire tutors to help in each area. Who should tutor Jordan in which area to maximize Jordan's college experience?

A) Jesse and Addae should tutor Jordan in both math and social skills.
B) Jesse should teach math and Addae should teach how to make friends.
C) Jesse and Addae should both teach how to make friends.
D) Jesse should teach how to make friends and Addae should teach math.

Question 39

As trade becomes more widespread, specialization ______, which in turn ______ productivity.

A) decreases; decreases
B) increases; increases
C) decreases; increases
D) increases; decreases

Question 40

If the goal of education were solely to support economic growth, the ideal graduate would be a:

A) jack-of-all-trades but master of none (where a "jack" is a serviceable tradesperson).
B) jack-of-one-trade and master of one.
C) jack-of-no-trades and master of none.
D) jack-of-some-trades but master of none.

Question 41

The real cost of producing a good is:

A) the dollar cost of inputs used to make the item.
B) the opportunity cost of producing the good.
C) the resources that were used to make the good.
D) the dollar amount it costs to sell the good.

Question 42

On a production possibilities frontier a trade-off can be illustrated as:

A) an outward shift.
B) an inward shift.
C) a movement from a point inside the frontier to one on the frontier.
D) a movement along the frontier itself.

Question 43

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?

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

Question 44

(Table: iPhone and iPod Production) According to the table on iPhone and iPod production, which of the following is TRUE about Canadian and U.S. comparative advantages?

A) Canada has a comparative advantage in producing both iPhones and iPods.
B) The United States has a comparative advantage in producing both iPhones and iPods.
C) Canada has a comparative advantage in producing iPhones, and the United States has a comparative advantage in producing iPods.
D) Canada has a comparative advantage in producing iPods, and the United States has a comparative advantage in producing iPhones.

Question 45

(Table: iPhone and iPod Production) According to the table on iPhone and iPod production, the opportunity cost of producing one iPhone is:

A) 4/3 of one iPod for Canada, and two iPods for the United States.
B) two iPods for Canada, and four iPods for the United States.
C) 3/4 of one iPod for Canada, and one iPod for the United States.
D) one iPod for Canada, and 3/4 of one iPod for the United States.

Question 46

Use the following to answer questions: Figure: PPF Goods X & Y
(Figure: PPF Goods X & Y) Refer to the figure. Which of the points representing various consumption possibilities for the country portrayed above is only attainable through foreign trade?

A) Point A
B) Point B
C) Point C
D) Both points C and B

Question 47

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?

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 48

According to the theory of comparative advantage:

A) every country can produce some good with a lower opportunity cost.
B) every country should produce goods that involve high opportunity costs.
C) some countries have a comparative advantage in producing every good.
D) some countries should import every good from other countries.

Question 49

Use the following to answer questions: Table: iPhone and iPod Production $$\begin{array} { l c c } \hline & \text { One iPhone } & \text { One iPod } \\\hline \text { Canadian labor units } & 3 & 4 \\\text { United States labor units } & 2 & 2 \\\hline\end{array}$$

-(Table: iPhone and iPod Production) According to the table on iPhone and iPod production, which of the following is TRUE?

A) Canada has an absolute advantage in producing both iPhones and iPods.
B) The United States has an absolute advantage in producing both iPhones and iPods.
C) Canada has an absolute advantage in producing iPhones, and the United States has an absolute advantage in producing iPods.
D) The United States has an absolute advantage in producing iPhones, and Canada has an absolute advantage in producing iPods.

Question 50

Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that:

A) France should specialize in producing phones and import computers from Sweden.
B) France should specialize in producing computers and import phones from Sweden.
C) France should produce both phones and computers, and import nothing from Sweden.
D) France should import both phones and computers from Sweden.

Question 51

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

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

Question 52

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

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 53

The production possibilities frontier shows:

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 54

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?

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

Question 55

The theory of comparative advantage is:

A) rarely relevant for identifying whether gains from trade can be obtained.
B) always relevant for identifying whether gains from trade can be obtained.
C) not true for nations, though it may be true for individuals.
D) true for nations, but it is not true for business or individuals.

Question 56

A producer has a comparative advantage over other producers if his production of the good involves:

A) more inputs.
B) fewer inputs.
C) a higher opportunity cost.
D) a lower opportunity cost.

Question 57

Which of the following statements shows how absolute advantage can be distinguished from comparative advantage?

A) Absolute advantage refers to the ability to produce a good using fewer inputs, while comparative advantage is based on the monthly amount.
B) Absolute advantage is based on the yearly production amount that a country can produce, while comparative advantage is based on the monthly production amount.
C) Absolute advantage refers to the ability to produce a larger amount of goods with the same number of inputs, whereas comparative advantage refers to the ability to have the lowest opportunity cost of production.
D) Absolute advantage is based on the amount of land a country has to use, while comparative advantage is based on the cost of the labor.

Question 58

Use the following to answer questions: Figure: PPF Goods X & Y
(Figure: PPF Goods X & Y) Refer to the figure. Point A represents an allocation of resources that is:

A) efficient.
B) inefficient.
C) impossible.
D) the result of trade.

Question 59

Comparative advantage is determined by which of the following?

A) efficiency
B) bargaining power
C) opportunity cost
D) productivity

Question 60

Suppose a country without any international trade opens its borders to international trade. After specialization how will its location on its production possibility frontier change?

A) The country moves from inside the PPF to on the PPF.
B) The country moves from on the PPF to beyond the PPF.
C) The country moves along the PPF toward its comparative advantage.
D) The country moves along the PPF away from its comparative advantage.

Question 61

Use the following to answer questions: Table: Production Possibilities for the United States and Mexico $$\begin{array} { l c c } \hline & \text { Corn (millions of tons) } & \text { Potatoes (millions of tons) } \\\hline \text { United States } & 50 & 10 \\\text { Mexico } & 40 & 5 \\\hline\end{array}$$

-(Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, Mexico has an absolute advantage in ________ and a comparative advantage in _________.

A) neither good; corn
B) corn; potatoes
C) potatoes; corn
D) neither good; potatoes

Question 62

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 ______.

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

Question 63

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of pasta for Belgium is:

A) 5 pounds of linen.
B) 20 pounds of linen.
C) 1/4 pound of linen.
D) 4 pounds of linen.

Question 64

Use the following to answer questions: Table: Production Possibilities for Kenya and Sri Lanka $$\begin{array} { l c c } \hline & \text { Beans (millions of tons) } & \text { Tea (millions of tons) } \\\hline \text { Kenya } & 100 & 200 \\\text { Sri Lanka } & 150 & 450 \\\hline\end{array}$$

-(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.)

A) 0.5 bean for one tea < Trade price < two teas for one bean
B) 0.5 bean for one tea < Trade price < three beans for one tea
C) two teas for one bean < Trade price < three teas for one bean
D) 0.3 bean for one tea < Trade price < two beans for one tea

Question 65

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?

A) Anita should split her time between cakes and cookies. John should bake cakes.
B) Anita should bake cakes and John should bake cookies.
C) Anita and John should split their time equally between cakes and cookies.
D) Anita should bake cookies and John should bake cakes.

Question 66

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of pasta for Italy is:

A) 2/5 pound of linen.
B) 4 pounds of linen.
C) 1/4 pound of linen.
D) 2 hours of labor.

Question 67

Use the following to answer questions: Table: Production Possibilities for the United States and Mexico $$\begin{array} { l c c } \hline & \text { Corn (millions of tons) } & \text { Potatoes (millions of tons) } \\\hline \text { United States } & 50 & 10 \\\text { Mexico } & 40 & 5 \\\hline\end{array}$$

-(Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, the United States has an absolute advantage in ________ and a comparative advantage in _________.

A) both goods; corn
B) both goods; potatoes
C) potatoes; corn
D) nothing; potatoes

Question 68

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of linen for Italy is:

A) 10 pounds of pasta.
B) 1/4 pound of pasta
C) 4 pounds of pasta
D) 2 1/2 pounds of pasta

Question 69

Use the following to answer questions: Table: Production Possibilities for the United States and Mexico $$\begin{array} { l c c } \hline & \text { Corn (millions of tons) } & \text { Potatoes (millions of tons) } \\\hline \text { United States } & 50 & 10 \\\text { Mexico } & 40 & 5 \\\hline\end{array}$$

-(Table: Production Possibilities for the United States and Mexico) Using the table on production possibilities for the United States and Mexico, assume each country specializes in the good for which it has a comparative advantage. Which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.)

A) 0.2 potato for one corn < Trade price < five corns for one potato
B) 0.125 potato for one corn,< Trade price < eight potatoes for one corn
C) five corns for one potato < Trade price < eight corns for one potato
D) 0.125 potato for one corn < Trade price < five potatoes for one corn

Question 70

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, Belgium should specialize in linen production because it:

A) has an absolute advantage in producing linen and pasta.
B) can do so at a greater opportunity cost.
C) has a comparative advantage in producing linen.
D) already can produce enough pasta to meet demand.

Question 71

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, Italy has comparative advantage in:

A) both goods, while Belgium has comparative advantage in neither good.
B) linen, while Belgium has comparative advantage in pasta.
C) pasta, while Belgium has comparative advantage in linen.
D) neither good, while Belgium has comparative advantage in both goods.

Question 72

Use the following to answer questions: Figure: PPF Mexico & United States
(Figure: PPF Mexico & United States) Use the figure in which both Mexico and the United States each have 24 units of labor. The opportunity costs of producing one shirt are:

A) one computer for Mexico and 1/6 of a computer for the United States.
B) 1/6 of a computer for Mexico and one computer for United States.
C) one computer for both Mexico and the United States.
D) 1/6 of computer for both Mexico and the United States.

Question 73

Use the following to answer questions: Table: Production in the United States and Germany $$\begin{array}{l}\text { Labor units required to produce: }\\\begin{array} { l c c } & \text { One Clock } & \text { One Sofa } \\\hline \text { United States } & 2 & 5 \\\text { Germany } & 3 & 9 \\\hline\end{array}\end{array}$$

-(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one sofa in the United States is _________, and the opportunity cost of producing one sofa in Germany is _______.

A) two clocks; three clocks
B) 10 clocks; 27 clocks
C) 0.4 clocks; 0.33 clocks
D) 2.5 clocks; three clocks

Question 74

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of linen for Belgium is:

A) 5 pounds of pasta.
B) 4 pounds of pasta.
C) 1/4 pound of pasta.
D) 20 pounds of pasta.

Question 75

Use the following to answer questions: Figure: PPF Mexico & United States
(Figure: PPF Mexico & United States) Use the figure in which both Mexico and the United States each have 24 units of labor. The opportunity costs of producing one computer are:

A) six shirts for Mexico and one shirt for the United States.
B) 1/6 of a shirt for both Mexico and the United States.
C) one shirt for Mexico and 1/6 of a shirt for the United States.
D) six shirts for both Mexico and the United States.

Question 76

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium $$\begin{array}{l}\text { Labor Hours Needed to Make One }\\\begin{array} { l c c c c } & { \text { Pound of: } } & &{ \text { Pounds produced in } 40 \text { hours: } } \\\hline & \text { Linen } & \text { Pasta } & \text { Linen } & \text { Pasta } \\\hline \text { Italy } & 10 & 4 & 4 & 10 \\\text { Belgium } & 2 & 8 & 20 & 5 \\\hline\end{array}\end{array}$$

-(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, Italy and Belgium both could benefit if Italy were to specialize in:

A) neither good, and Belgium were to specialize in both goods.
B) both goods, and Belgium were to specialize in neither good.
C) pasta, and Belgium were to specialize in linen.
D) linen, and Belgium were to specialize in pasta.

Question 77

Use the following to answer questions: Table: Production in the United States and Germany $$\begin{array}{l}\text { Labor units required to produce: }\\\begin{array} { l c c } & \text { One Clock } & \text { One Sofa } \\\hline \text { United States } & 2 & 5 \\\text { Germany } & 3 & 9 \\\hline\end{array}\end{array}$$

-(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one clock in the United States is _________, and the opportunity cost of producing one clock in Germany is _______.

A) five sofas; nine sofas
B) 0.4 sofas; 0.33 sofa
C) five clocks; nine clocks
D) 2.5 clocks; three clocks

Question 78

Use the following to answer questions: Table: Production Possibilities for Kenya and Sri Lanka $$\begin{array} { l c c } \hline & \text { Beans (millions of tons) } & \text { Tea (millions of tons) } \\\hline \text { Kenya } & 100 & 200 \\\text { Sri Lanka } & 150 & 450 \\\hline\end{array}$$

-(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, Kenya should produce ________ and Sri Lanka should produce __________.

A) beans; tea
B) tea; beans
C) both goods; neither good
D) neither good; both goods

Question 79

Use the following to answer questions: Table: Production Possibilities for Kenya and Sri Lanka $$\begin{array} { l c c } \hline & \text { Beans (millions of tons) } & \text { Tea (millions of tons) } \\\hline \text { Kenya } & 100 & 200 \\\text { Sri Lanka } & 150 & 450 \\\hline\end{array}$$

-(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, Kenya's opportunity cost of producing beans is ________, while Sri Lanka's opportunity cost of producing beans is _________.

A) 0.5 teas; 0.33 teas
B) two teas; 0.33 teas
C) 200 teas; 450 teas
D) two teas; three teas

Question 80

Use the following to answer questions: Table: Production Possibilities for the United States and Mexico $$\begin{array} { l c c } \hline & \text { Corn (millions of tons) } & \text { Potatoes (millions of tons) } \\\hline \text { United States } & 50 & 10 \\\text { Mexico } & 40 & 5 \\\hline\end{array}$$

-(Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, Mexico's opportunity cost of producing each ton of potatoes is ______, while the United States' opportunity cost of producing each ton of potatoes is ______.

A) 0.125 tons of potatoes; 0.2 tons of potatoes
B) eight tons of corn; 0.2 tons of potatoes
C) eight tons of corn; five tons of corn
D) five tons of corn; 0.2 tons of corn