Question 1

Suppose that, given the same number of workers, the United States can produce twice as many televisions or 20 times as many potatoes as Chile. Which of the following statements is true?
A) Chile should make televisions and trade them to the United States in exchange for potatoes, because the United States has an absolute advantage in the production of potatoes.
B) Chile should make potatoes and trade them to the United States in exchange for televisions, because the United States has an absolute advantage in the production of potatoes.
C) The United States can benefit from trading with Chile, but Chile will receive no benefit.
D) The United States has an absolute advantage at producing both televisions and potatoes.

Accepted Answer

The United States can produce both televisions and potatoes at a higher rate than Chile, indicating an absolute advantage in both goods.

Question 2

Suppose an American worker can make 100 nets or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 nets or catch 400 fish per day. Which of the following statements is true?
A) The United States has a comparative advantage at producing nets.
B) Chile has a comparative advantage at producing nets.
C) Both the United States and Chile have a comparative advantage at producing nets.
D) Neither the United States nor Chile has a comparative advantage at producing nets.

Accepted Answer

The answer of Suppose an American worker can make 100...

Question 3

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?
A) The U.S. has an absolute advantage at producing both gloves and radishes.
B) The U.S. does not have an absolute advantage at producing either gloves or radishes.
C) The U.S. has an absolute advantage at producing gloves, but not radishes.
D) The U.S. has an absolute advantage at producing radishes, but not gloves.

Accepted Answer

The answer of Suppose an American worker can make 50...

Question 4

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of one pair of shoes for the United States is _____, while the opportunity cost of one pair of shoes for Canada is ______.
A) 5 apples; 2 apples
B) 1/5 apple; 1/2 apple
C) 2,000 apples; 200 apples
D) 100 apples; 20 apples

Accepted Answer

The opportunity cost of one pair of shoes for the United States is 5 apples (since they can make 20 pairs of shoes or grow 100 apples per day) while the opportunity cost of one pair of shoes for Canada is 2 apples (since they can make 10 pairs of shoes or grow 20 apples per day). Therefore, the United States has a comparative advantage in producing shoes and Canada has a comparative advantage in growing apples. It would be beneficial for both countries to specialize in their comparative advantage and then trade with each other. For example, if the United States focuses solely on producing shoes, they could trade some of their shoes to Canada in exchange for apples, allowing both countries to consume more of both goods than if they tried to produce both goods on their own.

Question 5

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Suppose Country B's population of workers increases to 600. Country B now has:
A) an absolute advantage at producing both goods.
B) an absolute advantage at producing tablets only.
C) a comparative advantage at producing iPhones only.
D) no need to trade.

Accepted Answer

The answer of Suppose that a worker in Country A...

Question 6

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?
A) The U.S. has both an absolute advantage and a comparative advantage at producing shoes.
B) The U.S. has both an absolute advantage and a comparative advantage at producing apples.
C) The U.S. has an absolute advantage at producing both goods, but no comparative advantage
D) The U.S. has both an absolute advantage and a comparative advantage at producing both goods.

Accepted Answer

The answer of Suppose an American worker can make 20...

Question 7

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?
A) The United States has an absolute advantage at producing both shoes and apples.
B) Canada has an absolute advantage at producing both shoes and apples.
C) The United States has an absolute advantage at producing shoes and Canada has an absolute advantage at producing apples.
D) Canada has an absolute advantage at producing shoes and the United States has an absolute advantage at producing apples.

Accepted Answer

The United States can produce more of both shoes and apples per day than Canada, indicating an absolute advantage in both products.

Question 8

Suppose that, given the same number of workers, the United States can produce five times as many computers or ten times as many airplanes as Mexico. Which of the following statements is true?
A) The United States has an absolute advantage at producing computers and Mexico has an absolute advantage at producing airplanes.
B) The United States has an absolute advantage at producing airplanes and Mexico has an absolute advantage at producing computers.
C) The United States has an absolute advantage at producing both airplanes and computers.
D) Mexico has an absolute advantage at producing both airplanes and computers.

Accepted Answer

The United States can produce more of both computers and airplanes than Mexico with the same number of workers, indicating an absolute advantage in both goods.

Question 9

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is _____ for the United States than Canada, so Canada has a(n) _____ advantage at producing shoes.
A) higher; comparative
B) lower; comparative
C) higher; absolute
D) lower; absolute

Accepted Answer

The opportunity cost of a pair of shoes in the United States is 5 apples (100 apples/20 shoes), while in Canada it is 2 apples (20 apples/10 shoes). Therefore, the opportunity cost is higher in the United States, giving Canada a comparative advantage in producing shoes.

Question 10

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. What are their respective opportunity costs of one pair of gloves?
A) 6 radishes for the United States and 2 radishes for Bangladesh
B) 60 radishes for the United States and 20 radishes for Bangladesh
C) 1/6 radishes for the United States and ½ radishes for Bangladesh
D) 6,000 radishes for the United States and 2,000 radishes for Bangladesh

Accepted Answer

The opportunity cost of producing one pair of gloves for the American worker is 300 radishes divided by 50 pairs of gloves, which equals 6 radishes per pair of gloves. For the Bangladeshi worker, it's 200 radishes divided by 100 pairs of gloves, resulting in 2 radishes per pair of gloves.

Question 11

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?
A) The United States has a comparative advantage at producing shoes.
B) Canada has a comparative advantage at producing shoes.
C) Neither country has a comparative advantage at producing shoes.
D) Both countries have a comparative advantage at producing shoes.

Accepted Answer

The answer of Suppose an American worker can make 20...

Question 12

Suppose that only two goods are produced in an economy. If a country possesses a comparative advantage at producing one good, then it:
A) must also possess a comparative advantage at producing the other good.
B) must also possess an absolute advantage at producing that good.
C) cannot also possess a comparative advantage at producing the other good.
D) cannot also possess an absolute advantage at producing that good.

Accepted Answer

Possessing a comparative advantage in one good means that the opportunity cost of producing that good is lower than the opportunity cost of producing the other good. This does not necessarily mean that the country has an absolute advantage in producing the first good, and it also does not imply that the country cannot produce the other good. Therefore, it is possible for another country to have a comparative advantage in producing the other good.

Question 13

If a country has an absolute advantage at producing one good, which of the following is true?
A) It cannot have an absolute advantage at producing the other good.
B) It must also have a comparative advantage at producing both goods.
C) It can produce more of that good than the other good.
D) It can produce more of that good given the same resources.

Accepted Answer

Absolute advantage means the country can produce the good using fewer resources than another country. Therefore, with the same resources, the country with an absolute advantage can produce more of that good than the other good.

Question 14

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for the United States is:
A) 5 apples for each pair of shoes.
B) 5 pairs of shoes for each apple.
C) 1/55 apple for each pair of shoes.
D) 1 pair of shoes for every 2 apples.

Accepted Answer

The opportunity cost of making one pair of shoes in the United States is the amount of apples that could have been produced instead. Since the American worker can produce 20 pairs of shoes or 100 apples per day, the opportunity cost of producing one pair of shoes is 100 apples / 20 pairs of shoes = 5 apples for each pair of shoes.

Question 15

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?
A) Bangladesh should specialize in glove production because it has a comparative advantage at producing gloves.
B) Bangladesh should specialize in radish production because it has a comparative advantage at producing radishes.
C) Bangladesh should produce both gloves and radishes because it has an absolute advantage at producing both goods.
D) Bangladesh should produce only radishes because it has an absolute advantage at producing radishes.

Accepted Answer

Bangladesh has a comparative advantage at producing gloves because it can produce 100 pairs of gloves per day compared to the American worker's 50 pairs. This means that if the two countries specialize and trade with each other, Bangladesh can produce gloves and trade with the US for radishes, while the US can produce radishes and trade with Bangladesh for gloves. Both countries will benefit from this trade as they will be able to consume a combination of goods that they are not able to produce efficiently on their own.

Question 16

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. When trade opens up, the United States should produce _____ because it has a(n) _____ and should _____.
A) both goods; absolute advantage in both goods; not trade
B) only shoes; comparative advantage at producing shoes; trade for apples.
C) only apples; comparative advantage at producing apples; not trade
D) only apples; comparative advantage at producing apples; trade for shoes.

Accepted Answer

The answer of Suppose an American worker can make 20...

Question 17

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?
A) The U.S. has a comparative advantage at producing both gloves and radishes.
B) The U.S. does not have a comparative advantage at producing either gloves or radishes.
C) The U.S. has a comparative advantage at producing gloves only.
D) The U.S. has a comparative advantage at producing radishes only.

Accepted Answer

The U.S. has a lower opportunity cost for producing radishes (1/6 of a glove per radish) compared to Bangladesh (1/2 of a glove per radish), giving the U.S. a comparative advantage in radishes.

Question 18

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Canada's opportunity cost of producing a pair of shoes is _____ than the United States, so Canada should specialize in _____ production.
A) higher; shoe
B) lower; apple
C) higher; apple
D) lower; shoe

Accepted Answer

The answer of Suppose an American worker can make 20...

Question 19

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for Canada is:
A) 2 apples for each pair of shoes.
B) 2 pairs of shoes for each apple.
C) ½ apple for each pair of shoes.
D) ½ pair of shoes for every 2 apples.

Accepted Answer

The opportunity cost for Canada to produce 1 pair of shoes is the amount of apples it could have produced instead, which is 20 apples / 10 pairs of shoes = 2 apples per pair of shoes.

Question 20

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. The opportunity cost of one pair of gloves is:
A) lower for the United States than Bangladesh, therefore the United States has a comparative advantage at producing gloves.
B) higher for the United States than Bangladesh, therefore the United States has a comparative advantage at producing radishes.
C) the same for both the United States and Bangladesh, therefore neither country has a comparative advantage at producing gloves.
D) the same for both the United States and Bangladesh, therefore both countries have a comparative advantage at producing gloves.

Accepted Answer

The opportunity cost of one pair of gloves for the United States is 6 radishes (300 radishes/50 gloves) and for Bangladesh, it is 2 radishes (200 radishes/100 gloves). Therefore, the opportunity cost of one pair of gloves is higher for the United States than Bangladesh, indicating that Bangladesh has a comparative advantage at producing gloves.

Quiz 2: Specializationand Exchange

Suppose that, given the same number of workers, the United States can produce twice as many televisions or 20 times as many potatoes as Chile. Which of the following statements is true?

Suppose an American worker can make 100 nets or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 nets or catch 400 fish per day. Which of the following statements is true?

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Suppose Country B's population of workers increases to 600. Country B now has:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?

Suppose that, given the same number of workers, the United States can produce five times as many computers or ten times as many airplanes as Mexico. Which of the following statements is true?

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. What are their respective opportunity costs of one pair of gloves?

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?

Suppose that only two goods are produced in an economy. If a country possesses a comparative advantage at producing one good, then it:

If a country has an absolute advantage at producing one good, which of the following is true?

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for the United States is:

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. When trade opens up, the United States should produce ___ because it has a(n) _ and should ___.

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for Canada is:

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. The opportunity cost of one pair of gloves is: