Deck 7: International Trade, Income Poverty and Health Care

Question 1

Exhibit
?
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.

-Refer to Exhibit. If the terms of trade are established as 1 ton of apples for 2 tons of oranges:

A)there are no incentives for Omega to engage in international specialization and trade of apples and oranges.
B)it is in the interest of Omega to grow oranges and trade for apples.
C)it is in the interest of both countries to specialize and trade with one another.
D)there are no incentives for Alpha to specialize and trade with Omega.

Answer 1

there are no incentives for Alpha to specialize and trade with Omega.

Question 2

Exhibit
?
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.

-Refer to Exhibit. Which of the following exchange rates between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

A)1 ton of apples for 3 tons of oranges
B)3 tons of apples for 3 tons of oranges
C)2 tons of apples for 3 tons of oranges
D)1 ton of oranges for 0.2 tons of apples

Answer 2

1 ton of apples for 3 tons of oranges

Question 3

Exhibit
?
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.

-Refer to Exhibit. Which of the following exchange rates between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

A)1 ton of oranges for 1/3 of a ton of oranges
B)1 ton of apples for 3 1/3 tons of oranges
C)1 ton of apples for 2 tons of oranges
D)1 ton of oranges for 0.4 tons of apples

Answer 3

1 ton of apples for 3 1/3 tons of oranges

Question 4

Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.

-Refer to Exhibit. Which of the following is true?

A)Adam has an absolute advantage in oranges and a comparative advantage in apples.
B)Karl has an absolute advantage in oranges and a comparative advantage in oranges.
C)Karl has an absolute advantage in both apples and oranges.
D)Karl has an absolute advantage and a comparative advantage in apples.

Question 5

Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.

-Refer to Exhibit. Which of the following would be mutually beneficial terms of trade between Karl and Adam?

A)1 ton of apples per 2 1/2 tons of oranges
B)1 ton of apples per 1 1/2 tons of oranges
C)1 ton of apples per 1/4 ton of oranges
D)1 ton of apples per 1/5 ton of oranges

Question 6

Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.

-Refer to Exhibit. Which of the following is true?

A)Mutually beneficial trade between Karl and Adam could take place at an exchange rate of 1 ton of apples to 1 1/2 ton of oranges.
B)Mutually beneficial trade between Karl and Adam could take place at an exchange rate of 1 ton of oranges to 1 1/2 ton of apples.
C)both a. and b. are true.
D)neither a. nor b. are true.

Question 7

Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.

-Refer to Exhibit. If the exchange rate between apples and oranges in international markets is 1 ton of apples per 3 tons of oranges:

A)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges to other countries.
B)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples to other countries.
C)Karl and Adam will trade apples and oranges with one another.
D)Karl and Adam will not specialize or engage in international trade.

Question 8

Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.

-Refer to Exhibit. If the exchange rate between apples and oranges in international markets is 1 ton of oranges per 3 tons of apples:

A)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges to other countries.
B)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples to other countries.
C)Karl and Adam will trade apples and oranges with one another.
D)Karl and Adam will not specialize or engage in international trade.

Question 9

If the United States could produce 1 ton of potatoes or 1 ton of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:

A)the United States specializes in potatoes because of its comparative advantage in producing potatoes.
B)the United States specializes in wheat because of its absolute advantage in producing wheat.
C)the United States specializes in wheat because of its comparative advantage in producing wheat.
D)there can be no mutual gains from trade.

Question 10

Exhibit
Alternate Outputs from One Day's Labor Input:
United States: 12 bushels of wheat or 3 yards of textiles.
Great Britain: 3 bushels of wheat or 12 yards of textiles.

-Refer to Exhibit. From the data above, the United States

A)has an absolute advantage over Great Britain in the production of textiles.
B)has an absolute advantage over Great Britain in the production of wheat.
C)has a comparative advantage in the production of textiles
D)should export textiles to Great Britain.

Question 11

Increased number of divorce couples and the rise of two income families causes the measured distribution of income to appear more equal

Question 12

The official poverty rate for the United States for a family of four is approximately:

A)$12,000.
B)$16,000.
C)$20,000.
D)$24,000.

Question 13

In the United States, there are a number of programs that provide goods and services, such as food, medical care, and housing, to the poor. How could income standards be changed, in light of these programs, to better reflect absolute poverty?

A)The income standards should not change because these programs provide goods and services, not money.
B)The income standards should be increased, since it costs money to provide these goods and services.
C)The income standards should be increased, because these programs will affect the relative measure of poverty.
D)The income standards should be decreased, since program recipients require less income to meet a minimum standard of living.

Question 14

Which of the following is a close approximation of the price elasticity of demand for health care?

A)0.2
B)0.8
C)1.8
D)4.0