Question 1

When nations focus their productive resources on the goods and services they produce most efficiently, they are:

Accepted Answer

Specializing allows nations to focus on producing goods and services they can produce most efficiently, often based on their unique resources, technology, or skills. This concept is a fundamental aspect of international trade and economic theory, particularly comparative advantage, which suggests that countries should specialize in producing goods where they have a lower opportunity cost.

Question 2

You would expect an increase in international specialization among nations that:

Accepted Answer

International specialization among nations is expected to increase when there are widening differences in the costs of different resources among those nations. This is because countries tend to specialize in the production of goods and services that they can produce most efficiently, which is often determined by the relative costs of resources.

Question 3

Specialization should increase total output in the world economy if nations focus on producing goods and services:

Accepted Answer

Specialization increases total output when nations focus on producing goods and services that their resources can produce most efficiently. This is based on the principle of comparative advantage, where countries benefit from trading by specializing in the production of goods they can produce at a lower opportunity cost compared to others.

Question 4

According to the principle of comparative advantage, the main reason two countries should each produce a single good and trade with the other country for the good they do not produce is:

Accepted Answer

The principle of comparative advantage suggests that countries should specialize in producing goods for which they have a lower opportunity cost and trade for other goods. This leads to greater efficiency and increased overall production.

Question 5

According to the principle of comparative advantage, trade between two countries will benefit:

Accepted Answer

The principle of comparative advantage suggests that even if one country is more efficient in producing all goods (absolute advantage) compared to another, both countries will still benefit from trade if they specialize in producing goods for which they have a comparative advantage (lower opportunity cost). This leads to an increase in overall production and consumption for both countries.

Question 6

A nation is said to have a comparative advantage when it has a:

Accepted Answer

A nation has a comparative advantage when it can produce a good at a lower opportunity cost than another nation, not necessarily because of a larger demand, inventory, or monopoly control.

Question 7

When a nation gives up fewer units of other goods and services than are given up by other nations to produce one unit of a product, that nation has a:

Accepted Answer

A nation has a comparative advantage in producing a product if it can produce it at a lower opportunity cost than other nations. This means it gives up fewer resources or other goods to produce one unit of the product compared to other nations.

Question 8

Comparative advantage in international trade is based on differences in:

Accepted Answer

Comparative advantage in international trade is based on the concept that a country has a comparative advantage in producing a good if it can produce it at a lower opportunity cost than other countries. This means it sacrifices less of other goods to produce it, making trade beneficial even if one country is more efficient in producing all goods.

Question 9

With one unit of resources each, Country A can produce sixty automobiles or six airplanes and Country B can produce sixty automobiles or four airplanes. Country A has a comparative advantage over Country B in the production of:

Accepted Answer

Country A has a comparative advantage in producing airplanes because it gives up fewer automobiles to produce one airplane compared to Country B (10 automobiles per airplane for Country A vs. 15 automobiles per airplane for Country B). Comparative advantage is determined by the opportunity cost of producing one good over another.

Question 10

With one unit of resources each, Country A can produce sixty computers or six air conditioners and Country B can produce eighty computers or ten air conditioners. Country A has a comparative advantage over Country B in the production of:

Accepted Answer

Country A can produce more computers or air conditioners with the same amount of resources compared to Country B. Therefore, Country A has a comparative advantage in the production of both computers and air conditioners.

Question 11

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals.
-According to the principle of comparative advantage, Country A should:

Accepted Answer

Country A has a lower opportunity cost for producing schools (1 school costs 1/3 hospital) compared to Country B (1 school costs 1/2 hospital), making it more efficient for Country A to specialize in schools.

Question 12

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals.
-The opportunity cost to Country B of producing one school is:

Accepted Answer

The opportunity cost of producing one school in Country B is the number of hospitals that could have been produced instead. Since Country B can produce 12 schools or 6 hospitals with one unit of resources, the opportunity cost of producing one school is 6 hospitals / 12 schools = 0.5 hospitals.

Question 13

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals.
-The opportunity costs to Country A and to Country B of producing one hospital each are:

Accepted Answer

Country A's opportunity cost of producing one hospital is 3 schools (12 schools / 4 hospitals = 3 schools per hospital). Country B's opportunity cost of producing one hospital is 2 schools (12 schools / 6 hospitals = 2 schools per hospital).

Question 14

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources.
-The opportunity cost to Country A of using its one unit of resources to produce 9 raincoats is:

Accepted Answer

The opportunity cost of producing 9 raincoats in Country A is the amount of the other good (tents) that could have been produced with the same resources, which is 6 tents.

Question 15

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources.
-Based on the principle of comparative advantage, Country B should produce:

Accepted Answer

Country B has a comparative advantage in producing tents because it can produce tents at a lower opportunity cost compared to raincoats. For Country B, the opportunity cost of producing one tent is one raincoat (8 tents = 8 raincoats), whereas for Country A, the opportunity cost of producing one tent is higher (1.5 raincoats for each tent, since 9 raincoats = 6 tents). Therefore, based on the principle of comparative advantage, Country B should specialize in producing tents.

Question 16

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources.
-The opportunity cost to Country A of producing one raincoat is:

Accepted Answer

The opportunity cost for Country A to produce one raincoat is the number of tents it could have produced instead. Since Country A can produce 6 tents with the same resources needed for 9 raincoats, the opportunity cost of one raincoat is 6/9 = 2/3 of a tent.

Question 17

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L.
 
-The opportunity cost to Country K of devoting one unit of resources to the production of coffee is:

Accepted Answer

The opportunity cost of producing one unit of a good is the amount of another good that must be forgone to produce that unit. If Country K must give up 12 pounds of tea to produce one unit of coffee, then the opportunity cost of producing one unit of coffee is 12 pounds of tea.

Question 18

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L.
 
-The opportunity cost to Country L of producing one pound of coffee is:

Accepted Answer

The answer of Use the following table showing production possibilities...

Question 19

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L.
 
-Based on the principle of comparative advantage, Country K should:

Accepted Answer

The principle of comparative advantage suggests that a country should produce and export goods for which it has a lower opportunity cost of production compared to other countries, and import goods for which other countries have a lower opportunity cost of production. Without specific data, the correct choice is based on the principle that Country K should specialize in producing the good for which it has a comparative advantage (in this case, tea) and import the other good (coffee) from Country L, which presumably has a comparative advantage in producing coffee.

Question 20

-If the U.S. and Japan have the production possibilities in the table, the opportunity cost for the U.S. of producing 100 tons of grain is:

Accepted Answer

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-If the U.S. and Japan have the...

Quiz 16: International Trade

When nations focus their productive resources on the goods and services they produce most efficiently, they are:

You would expect an increase in international specialization among nations that:

Specialization should increase total output in the world economy if nations focus on producing goods and services:

According to the principle of comparative advantage, the main reason two countries should each produce a single good and trade with the other country for the good they do not produce is:

According to the principle of comparative advantage, trade between two countries will benefit:

A nation is said to have a comparative advantage when it has a:

When a nation gives up fewer units of other goods and services than are given up by other nations to produce one unit of a product, that nation has a:

Comparative advantage in international trade is based on differences in:

With one unit of resources each, Country A can produce sixty automobiles or six airplanes and Country B can produce sixty automobiles or four airplanes. Country A has a comparative advantage over Country B in the production of:

With one unit of resources each, Country A can produce sixty computers or six air conditioners and Country B can produce eighty computers or ten air conditioners. Country A has a comparative advantage over Country B in the production of:

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals. -According to the principle of comparative advantage, Country A should:

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals. -The opportunity cost to Country B of producing one school is:

With one unit of resources each, Country A can produce 12 schools or 4 hospitals and Country B can produce 12 schools or 6 hospitals. -The opportunity costs to Country A and to Country B of producing one hospital each are:

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources. -The opportunity cost to Country A of using its one unit of resources to produce 9 raincoats is:

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources. -Based on the principle of comparative advantage, Country B should produce:

Country A can produce 9 raincoats or 6 tents with one unit of resources, and Country B can produce 8 raincoats or 8 tents with one unit of resources. -The opportunity cost to Country A of producing one raincoat is:

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L. -The opportunity cost to Country K of devoting one unit of resources to the production of coffee is:

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L. -The opportunity cost to Country L of producing one pound of coffee is:

Use the following table showing production possibilities for tea and coffee from one unit of resources in Country K and one unit of resources in Country L. -Based on the principle of comparative advantage, Country K should:

-If the U.S. and Japan have the production possibilities in the table, the opportunity cost for the U.S. of producing 100 tons of grain is: