Question 1

If nation A has a comparative advantage over nation B in the production of a product,this implies:

Accepted Answer

Comparative advantage means that a country can produce a good or service at a lower opportunity cost than another country. This means that the country with a comparative advantage can produce the good or service at a lower cost in terms of the other goods or services it could have produced instead. Therefore, choice B is the correct answer, as it says that the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. Choices A, C, D, and E are all incorrect as they do not accurately reflect the concept of comparative advantage.

Question 2

If the opportunity cost of producing cheese is higher in Greece than it is in Italy,then:

Accepted Answer

Since the opportunity cost of producing cheese is higher in Greece, it means that Greece has to give up producing more of some other good in order to produce one unit of cheese. In contrast, Italy has a lower opportunity cost of producing cheese, meaning they give up less of another good to produce cheese. Therefore, it is more efficient for Italy to specialize in producing cheese while Greece specializes in producing something else that they have a comparative advantage in. This would result in both countries producing more goods overall and trading with each other to benefit from their respective advantages.

Question 3

When Brazil can generate a product using fewer labor hours and resources than the United States,an economist would say that Brazil had:

Accepted Answer

The answer of When Brazil can generate a product using...

Question 4

If India has an absolute advantage in rug production when compared to England,then:

Accepted Answer

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Question 5

The average National Basketball Association player is over 6 feet tall.The average horse jockey is shorter than 5 1/2 feet tall.This is because height provides NBA players with:

Accepted Answer

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Question 6

If Japan gives up ten bushels of rice to produce one bicycle,while the United States gives up five bushels of rice to produce one bicycle,then:

Accepted Answer

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Question 7

If one country can produce a good with fewer resources than another country,this is called:

Accepted Answer

If one country can produce a good with fewer resources than another country, then that country has an absolute advantage in producing that good.

Question 8

Absolute advantage occurs when one nation can produce a good ____ its trading partners.

Accepted Answer

Absolute advantage refers to a country's ability to produce a good or service more efficiently than its trading partners. This means they can produce the same amount of the good with fewer resources or produce more of the good with the same amount of resources.

Question 9

If Dana can paint his house faster than Luke,a professional house painter,then:

Accepted Answer

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Question 10

If a country has a comparative advantage in oil,then this means that the opportunity cost of producing oil is:

Accepted Answer

A country having a comparative advantage in oil means that it can produce oil at a lower opportunity cost compared to other goods or services. Therefore, the opportunity cost of producing oil is low.

Question 11

Absolute advantage is the ability of a country to produce a good with ____ than another country.

Accepted Answer

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Question 12

Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats.Under a system of free trade,each country specializes and then trades with the other.If the price starts at four hats per doormat,and then increases to five hats per doormat,then:

Accepted Answer

When the price of doormats in terms of hats increases, it means that the relative price of hats has decreased. This leads to a shift in demand towards hats, and therefore Portugal (with a comparative advantage in doormats) will receive some of the gains from trade. Specifically, they will be able to sell their doormats for a higher price in terms of hats, which means they are able to buy more hats than they could before. Therefore, some of the gains from trade shift to Portugal.

Question 13

A lawyer once said,"I could paint my house and fix my plumbing if I just had some technical training and good tools.But,I would rather hire a painter and a plumber." When it comes to fixing a leaking sink,the plumber:

Accepted Answer

The plumber has a comparative advantage in fixing a leaking sink as it is their specialized skill and they can do it more efficiently and effectively than someone without that expertise. This is the reason why the lawyer would rather hire a plumber instead of trying to fix the sink themselves.

Question 14

If a country has a comparative advantage in the production of all goods,it should:

Accepted Answer

If a country has a comparative advantage in the production of all goods, it means it can produce all goods at a lower opportunity cost than other countries. Therefore, the country should specialize in the production of the goods with the lowest opportunity cost, as this will result in the greatest overall efficiency and economic gains. By specializing in the production of goods with the lowest opportunity cost, the country can sell those goods to other countries and use the earnings to import goods that it cannot produce at a lower opportunity cost. This will maximize the country's overall welfare.

Question 15

A country that can produce a good using fewer resources than another country has a(n):

Accepted Answer

The answer of A country that can produce a good...

Question 16

A country is said to have an absolute advantage in the production of a good when:

Accepted Answer

Absolute advantage is when a country can produce a good using fewer resources than another country. This means that they can produce the same amount of goods with less effort, time, or money. It does not necessarily mean that the country has a lower opportunity cost, and it may or may not specialize in the production of the good. Therefore, the correct answer is B.

Question 17

If nation A has an absolute advantage over nation B in the production of a product,this implies that:

Accepted Answer

Absolute advantage means that one country can produce a good using fewer resources than another country. Therefore, choice A is correct. Choice B is incorrect because absolute advantage does not necessarily mean that the opportunity cost is lower in one country than in another. Choice C and E are incorrect because trade can still be mutually beneficial even if one country has an absolute advantage. Choice D is incorrect because if nation A has an absolute advantage, it would not make sense for them to acquire the product from nation B.

Question 18

If Country A has an absolute advantage over Country B in the production of every commodity:

Accepted Answer

Even if Country A has an absolute advantage over Country B in the production of every commodity, mutual gains from trade are still possible. This is because each country can specialize in producing the goods they have a comparative advantage in, leading to efficiencies and increased joint output. Country B can benefit from trading with Country A by importing goods they are less efficient at producing and exporting goods they are more efficient at producing, while Country A can benefit from having a larger market for their goods and being able to import goods they are less efficient at producing.

Question 19

Juanita,a lawyer,can type faster than Jill,her secretary.Jill,on the other hand,does not have the ability or skills to practice law.Applying the principles of international trade to this situation,an economic consultant advises Juanita to:

Accepted Answer

The principle of comparative advantage suggests that each person should specialize in the activity at which they have a comparative advantage, and trade with others for goods and services they do not specialize in. In this situation, Juanita has a comparative advantage in practicing law, while Jill has a comparative advantage in typing. Therefore, it would be best for Juanita to practice law and leave the typing to Jill, allowing each to specialize in their area of comparative advantage.

Question 20

If a country has a lower opportunity cost of producing oranges,then this is:

Accepted Answer

When a country has a lower opportunity cost of producing oranges, this means it has a comparative advantage in producing oranges compared to other countries. In other words, if the country were to allocate its resources towards producing oranges, it would give up less of other goods than other countries would if they were to produce oranges. This makes it more efficient for the country to produce oranges and it should specialize in producing oranges and trade with other countries for goods that they have a comparative advantage in producing.

Quiz 21: International Trade and Finance