Deck 5: International Trade 5

Question 1

Over the past 50 years in the United States, as a percentage of gross domestic product:

A)exports have grown and imports have remained constant.
B)imports have grown and exports have remained constant.
C)exports have decreased.
D)exports and imports have grown.

Answer 1

D

Question 2

The United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 5 tractors is _____ bicycles.

A)5
B)20
C)100
D)125

Answer 2

D

Question 3

Goods and services purchased from abroad are _____, while goods and services sold abroad are _____.

A)exports; imports
B)imports; exports
C)exports; quotas
D)quotas; factors

Answer 3

B

Question 4

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. In autarky, the opportunity cost of 1 ton of beef in the Netherlands is:

A)100 tons of beef.
B)1,000 boxes of tulips.
C)10 boxes of tulips.
D)0)1 box of tulips.

Question 5

On a production possibility frontier, opportunity cost is:

A)the decrease in the output of one good when the output of the other good is increased.
B)the rate at which people are willing to exchange goods as determined by demand and supply.
C)the dollar cost of the good given up to get another good.
D)independent of the slope of the curve.

Question 6

In a Ricardian model of international trade, the production possibility frontiers are _____, indicating that the opportunity cost of increasing the production of one item relative to another _____.

A)convex; is constant
B)concave; increases
C)straight lines; is constant
D)straight lines; decreases

Question 7

France and England both produce wine and clothing with constant opportunity costs. France will have a comparative advantage in wine production if:

A)it can produce more wine than England.
B)its labor productivity in wine production is greater than England's.
C)the absolute cost of producing wine is lower in France than in England.
D)the opportunity cost of wine production is lower in France than in England.

Question 8

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. From this information, we know that:

A)the Netherlands has a comparative advantage in raising beef.
B)the Netherlands has a comparative advantage in raising tulips.
C)Belgium has a comparative advantage in raising beef.
D)Belgium has an absolute advantage in raising beef.

Question 9

Production possibility frontiers:

A)illustrate the production choices available to an economy.
B)assume full employment but not maximum efficiency.
C)assume maximum efficiency but not full employment.
D)are used to illustrate the law of decreasing opportunity costs.

Question 10

As measured by a percentage of the entire economic output of the United States, imports have been _____ and exports have been _____.

A)increasing; increasing
B)decreasing; decreasing
C)increasing; decreasing
D)decreasing; increasing

Question 11

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 4 sweaters is _____ hats.

A)4
B)12
C)71
D)79

Question 12

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.

Question 13

France and England both produce wine and cloth with 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 100 bolts of cloth if it produces no wine. Using this information, we can conclude that:

A)France has a comparative advantage in cloth production.
B)England has a comparative advantage in cloth production.
C)France has a comparative advantage in both goods.
D)mutually beneficial international trade is not possible.

Question 14

Use the following to answer questions 17-18:
Table: The Production Possibilities for Cars and Leather Boots

(Table: The Production Possibilities for Cars and Leather Boots) Look at the table The Production Possibilities for Cars and Leather Boots. Given the opportunity costs of production:

A)there is no basis for trade.
B)Mexico should specialize in boots.
C)the United States should specialize in cars.
D)the United States should specialize in both goods, and Mexico should not produce either good.

Question 15

Use the following to answer questions 17-18:
Table: The Production Possibilities for Cars and Leather Boots

(Table: The Production Possibilities for Cars and Leather Boots) Look at the table The Production Possibilities for Cars and Leather Boots. The opportunity cost of producing one car in Mexico is:

A)500 pairs of leather boots.
B)1,000 pairs of leather boots.
C)different from the opportunity cost in the United States.
D)2,000 pairs of leather boots, which is the same as in the United States.

Question 16

The United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 100 bicycles is _____ tractor(s).

A)1
B)4
C)25
D)100

Question 17

The absolute value of the slope of the production possibility frontier at any point:

A)gives the autarky price of the good on the vertical axis.
B)is found by dividing the horizontal change by a vertical change.
C)gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis.
D)gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis.

Question 18

The _____ analyzes trade under the assumption that opportunity costs are constant and therefore production possibility frontiers are straight lines.

A)pauper labor fallacy model
B)Ricardian model
C)Heckscher-Ohlin model
D)oligopoly model

Question 19

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is _____ sweater(s).

A)1
B)3
C)22
D)28

Question 20

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. In autarky the opportunity cost of beef:

A)is higher in the Netherlands than in Belgium.
B)is lower in the Netherlands than in Belgium.
C)is the same in the Netherlands as in Belgium.
D)cannot be determined in either country.

Question 21

If the United States can produce 30 computers for every car it produces and Japan can produce 15 computers for every car it produces, _____ has the _____ advantage in car production.

A)the United States; comparative
B)Japan; comparative
C)the United States; absolute
D)Japan; absolute

Question 22

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

Question 23

If Japan 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

Question 24

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.

Question 25

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

A)petroleum; less
B)petroleum; more
C)petroleum; the same
D)machinery; the same

Question 26

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 10 units of machinery is _____ units of petroleum.

A)30
B)90
C)180
D)270

Question 27

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

Question 28

Japan must give up the production of 75 computers to produce 25 additional cellular telephones. The opportunity cost of producing 3 computers is _____ cell phone(s).

A)1
B)3
C)22
D)28

Question 29

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.

Question 30

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

A)machinery; more
B)machinery; the same
C)machinery; less
D)petroleum; less

Question 31

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. 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

Question 32

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. In the United States the opportunity cost of producing 40 units of machinery is _____ units of petroleum.

A)80
B)60
C)40
D)20

Question 33

The term autarky refers to a country that:

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.

Question 34

The belief that trade must be bad for exporting countries because the foreign workers are paid very low wages by our standards is the:

A)pauper labor fallacy.
B)sweatshop labor fallacy.
C)third-world country fallacy.
D)Nike fallacy.

Question 35

France and England both produce wine and cloth with 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 completely 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

Question 36

Lower wages in China reflect _____ labor productivity in China than in the United States. This means that if the United States moved high-tech industries to China, the overall cost of production would be _____ in China than in the United States.

A)lower; higher
B)lower; lower
C)higher; higher
D)higher; lower

Question 37

Use the following to answer questions 26-31:
(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 105 units of petroleum is _____ units of machinery.

A)35
B)70
C)90
D)160

Question 38

The United States must give up the production of 300 motorcycles to produce 15 additional SUVs with the same resources. The opportunity cost of producing 100 motorcycles is _____ SUV(s).

A)1
B)5
C)7
D)15

Question 39

The United States 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

Question 40

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. Trade will take place between these two countries if 1 ton of beef costs _____ boxes of tulips.

A)20
B)5
C)12
D)8

Question 41

Honduras exports clothing to the United States, and the United States exports bulldozers to Honduras. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

A)Honduras has an advantage in the technology used in clothing production, while the United States has an advantage in the technology used in bulldozer production.
B)Honduras's climate is more conducive to producing clothing, while the United States' climate is more conducive to producing bulldozers.
C)Honduras has a relatively large endowment of factors of production for making clothing, while the United States has a relatively large endowment of factors of production for making bulldozers.
D)Honduras has a factor intensity in capital and the United States has a factor intensity in labor.

Question 42

Use the following to answer questions 55-59:
(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. _____ has (have) an absolute advantage in producing cars.

A)Both the United States and Canada
B)Neither the United States nor Canada
C)The United States
D)Canada

Question 43

Use the following to answer questions 55-59:
(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. In _____, the opportunity cost of _____ cars is _____ board feet of lumber.

A)the United States; 1 million; 10 million
B)the United States; 10 million; 1 million
C)Canada; 1 million; 6 million
D)Canada; 1 million; 166,000

Question 44

Which of the following trade patterns is best explained by increasing returns?

A)Honduras exports bananas to the United States and the United States exports airplanes to Honduras.
B)Pakistan exports clothing to the United States and the United States exports airplanes to Pakistan.
C)Japan exports cars to the United States and the United States exports airplanes to Japan.
D)Mexico exports beef to the United States and the United States exports airplanes to Mexico.

Question 45

Mexico is relatively labor-abundant when compared with the United States. Therefore, Mexico has a comparative advantage in _____ compared with the United States.

A)all goods
B)goods that are labor-intensive in production
C)goods that are capital-intensive in production
D)goods that are land-intensive in production

Question 46

Bangladesh exports shirts, the making of which is labor-intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is:

A)a hotter climate, which makes it possible to produce shirts outdoors, eliminating the need for factory buildings and hence reducing costs.
B)superior production technology.
C)that in comparison with the United States, Bangladesh is a labor-abundant country.
D)the higher labor productivity in Bangladesh.

Question 47

Which is NOT a source of comparative advantage?

A)In general, France has absolute advantage over Italy in production of goods and services.
B)The United States' technology for computer chip design is more advanced than India's.
C)Hawaii has a more favorable climate to grow pineapple than Italy.
D)In the market for lumber, Canada has many more trees than England.

Question 48

If the _____ differ(s) between two countries, this suggests the possibility for mutually advantageous trade.

A)currency
B)factor endowments
C)exchange rate
D)level of government spending for defense

Question 49

An urbanized country has 100 million workers living on 100 square miles of land. A country that is principally rural has 1 million workers living on 10 square miles of land. From this information we know that the urbanized country is _____ relative to the rural country.

A)land-abundant
B)labor-abundant
C)land-intensive
D)labor-intensive

Question 50

According to the Heckscher-Ohlin model, Brazil will have a comparative advantage in oranges if the factors _____ in the production of oranges are _____.

A)intensive; abundant
B)intensive; imported
C)that are scarce; imported
D)intensive; inexpensive

Question 51

Both the United States and Canada produce automobiles and their components; however, each particular model or component is produced in only one of the two countries. Which of the following explains this pattern of production and trade?

A)differences in climate
B)differences in factor endowments
C)differences in technology
D)the role of increasing returns

Question 52

Japan's comparative advantage in automobiles can be attributed to:

A)climate.
B)factor endowments.
C)technology.
D)exchange rates.

Question 53

Chile has a comparative advantage over the United States in copper. Which of the following is a source of this comparative advantage?

A)mild temperatures
B)large deposits of copper ore
C)no opportunity cost associated with copper production
D)high tariffs on copper from other nations

Question 54

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

A)the pauper labor fallacy model
B)the Ricardian model
C)the Heckscher-Ohlin model
D)the oligopoly model

Question 55

Use the following to answer questions 55-59:
(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. If these nations trade, Canada has the comparative advantage in _____ and should trade _____ to the United States in exchange for _____.

A)cars; cars; lumber
B)lumber; lumber; cars
C)lumber; cars; lumber
D)cars; lumber; cars

Question 56

Use the following to answer questions 55-59:
(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. If these nations were to specialize and trade, the United States would export 1 million cars to Canada in exchange for _____ million board feet of lumber.

A)2
B)0)5
C)8
D)1

Question 57

China, which is labor-abundant, has a comparative advantage in clothing production, which is labor-intensive. Which of the following models explains this pattern of comparative advantage?

A)the Ricardian model
B)a model of increasing returns
C)the Heckscher-Ohlin model
D)a model of autarky

Question 58

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. _____ has a(n) _____ advantage in the production of _____.

A)Jackson; comparative; cattle
B)Tahoe; comparative; wheat
C)Jackson; comparative; wheat
D)Jackson; absolute; cattle

Question 59

Use the following to answer questions 55-59:
(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. _____ has (have) an absolute advantage in producing lumber.

A)Both the United States and Canada
B)Neither the United States nor Canada
C)The United States
D)Canada

Question 60

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

A)labor abundance.
B)mild climate.
C)advanced technology.
D)increasing returns.

Question 61

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Both the United States and Mexico will gain from trade if one tractor trades for _____ barrels of crude oil.

A)5,000
B)4,000
C)1,000
D)200

Question 62

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In Mexico the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

A)30,000
B)90,000
C)120,000
D)270,000

Question 63

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. If the two countries engage in international trade and specialize completely and if the price of 1 head of cattle equals the price of 2 bushels of wheat, world production of cattle will:

A)remain constant.
B)increase by 90 head.
C)increase by 120 head.
D)decrease by 30 head.

Question 64

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. With complete specialization according to comparative advantage, the two nations' combined production of wheat will:

A)remain constant.
B)increase by 120 bushels.
C)increase by 60 bushels.
D)decrease by 60 bushels.

Question 65

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _____ and Mexico has a comparative advantage in _____.

A)both goods; neither good
B)neither good; both goods
C)tractors; crude oil
D)crude oil; tractors

Question 66

Use the following to answer questions 79-91:
Figure: The Production Possibilities for Two Countries
(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. The opportunity cost of producing 1 tire in Indonesia is _____ radio(s), while the opportunity cost of producing 1 tire in Malaysia is _____ radio(s).

A)0)5; 2
B)2; 1
C)600; 800
D)800; 1,200

Question 67

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. Assume each nation specializes completely, based on comparative advantage, and the price of 1 head of cattle equals the price of 2 bushels of wheat. If Jackson exports 120 bushels of wheat to Tahoe, Tahoe will export _____ head of cattle to Jackson.

A)120
B)60
C)240
D)200

Question 68

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Both the United States and Mexico will gain from trade if one tractor trades for _____ barrels of oil.

A)1,500
B)4,500
C)6,500
D)8,500

Question 69

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In Mexico the opportunity cost of producing 150,000 barrels of crude oil is _____ tractors.

A)50
B)70
C)90
D)160

Question 70

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Which of the following is TRUE?

A)The opportunity cost of crude oil is lower in the United States than in Mexico.
B)The opportunity cost of crude oil is higher in the United States than in Mexico.
C)Crude oil costs are the same in the United States and in Mexico.
D)Tractor costs are the same in the United States and in Mexico.

Question 71

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In the United States the opportunity cost of producing 30,000 barrels of crude oil is _____ tractors.

A)60
B)80
C)100
D)120

Question 72

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. Jackson has an absolute advantage in producing:

A)wheat only.
B)cattle only.
C)both wheat and cattle.
D)neither wheat nor cattle.

Question 73

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. _____ has (have) an absolute advantage in producing tractors.

A)The United States
B)Mexico
C)Both the United States and Mexico
D)Neither the United States nor Mexico

Question 74

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. If both nations specialize completely in the good of their comparative advantage and Jackson exports 120 bushels of wheat to Tahoe in exchange for 60 head of cattle, then the new consumption point for Jackson after trade is _____ bushels of wheat and _____ head of cattle.

A)120; 30
B)120; 60
C)80; 60
D)200; 100

Question 75

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

A)tractors; higher
B)tractors; the same
C)tractors; lower
D)crude oil; lower

Question 76

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In the United States the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

A)80,000
B)60,000
C)40,000
D)20,000

Question 77

Use the following to answer questions 68-78:
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. _____ has (have) an absolute advantage in producing crude oil.

A)The United States
B)Mexico
C)Both the United States and Mexico
D)Neither the United States nor Mexico

Question 78

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. Tahoe has an absolute advantage in producing:

A)wheat only.
B)cattle only.
C)both wheat and cattle.
D)neither wheat nor cattle.

Question 79

Use the following to answer questions 60-67:
Figure: The Production Possibility Frontiers for Jackson and Tahoe
(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. Each nation specializes completely, based on comparative advantage, and the price of 1 head of cattle equals the price of 2 bushels of wheat. If Jackson exports 120 bushels of wheat to Tahoe, then the new consumption point for Tahoe after trade is _____ bushels of wheat and _____head of cattle.

A)120; 140
B)120; 60
C)60; 120
D)400; 200

Question 80

Use the following to answer questions 79-91:
Figure: The Production Possibilities for Two Countries
(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. The opportunity cost of producing 1 radio in Indonesia is:

A)0)5 tire.
B)1 tire.
C)2 tires.
D)6 tires.