Question 1

Consider the following table on output producible per 100 labor hours:  Which of the following statements is correct?
A) All of the following are correct.
B) France has a comparative advantage in producing computers.
C) Italy's opportunity cost is 4 units of wine per computer.
D) France produces more computers than Italy does.
E) France produces more wine than Italy does.

Accepted Answer

The answer of Consider the following table on output producible...

Question 2

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the maximum number of vases that could be produced in one hour is
A) 400
B) 25
C) 50
D) 100
E) 80

Accepted Answer

The answer of In a Mexican factory,each worker can produce...

Question 3

-In Figure 16-2,if Korea produces two fewer radios,then how many more calculators could it produce?
A) 12
B) 2
C) 1
D) 4
E) 6

Accepted Answer

Looking at the chart, we see that producing one radio requires 4 workers and producing one calculator requires 3 workers. If Korea produces two fewer radios, it would free up 8 workers (4 workers per radio x 2 fewer radios). Since it takes 3 workers to produce one calculator, Korea could then produce 8/3=2.67 calculators. However, since Korea cannot produce a fraction of a calculator, the answer would be that it could produce 1 more calculator. Therefore, the answer is C) 1.

Question 4

Consider the following information on labor hours needed per unit of output:  Ignoring nonlabor inputs,which of the following statements is correct?
A) France has an absolute advantage in the production of both goods.
B) France has a comparative advantage in the production of both goods.
C) the opportunity cost of a computer in Italy is 4 units of wine.
D) the opportunity cost of a unit of wine in France is 2 computers.
E) France produces more computers that Italy produces wine.

Accepted Answer

The answer of Consider the following information on labor hours...

Question 5

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one statue is
A) 1/2 of a vase
B) 1/8 of a vase
C) 8 vases
D) 16 vases
E) 2 vases

Accepted Answer

To determine the opportunity cost of one statue, we need to find how many vases one could produce in the time it takes to produce one statue.

Let's start by finding the production rate of one worker per hour:

- 1/8 vase per hour + 1/16 statue per hour = 2/16 vase per hour + 1/16 vase per hour = 3/16 vase per hour

Now let's find the time it takes for 400 workers to produce one statue:

- 1 statue / (400 workers x 1/16 statue per hour) = 16 hours

So in 16 hours, 400 workers could produce either:

- 16 x (400 workers x 1/8 vase per hour) = 800 vases 
- 1 statue and (16 x (400 workers x 1/8 vase per hour)) = 1 statue and 800 vases

Therefore, the opportunity cost of one statue is 800 vases, or 2 vases per statue.

Therefore, the best choice is E.

Question 6

Suppose that for each automobile Japan produces it must forego producing 40 computers.The United States must forego producing 80 computers for each automobile it produces.Which of the following is true?
A) Japan has a comparative advantage in producing computers.
B) the U.S.has a comparative advantage in producing computers.
C) the U.S.has a comparative advantage in producing automobiles.
D) the U.S.has an absolute advantage in producing automobiles.
E) the opportunity cost of producing computers is the same for Japan and the U.S.

Accepted Answer

The opportunity cost of producing automobiles for Japan is 40 computers, while it is 80 computers for the United States. This means that the United States has a higher opportunity cost for producing automobiles and therefore has a comparative advantage in producing computers. Conversely, Japan has a lower opportunity cost for producing computers and therefore has a comparative advantage in producing them.

Question 7

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?
A) The opportunity cost of producing watches is lower in Switzerland.
B) The opportunity cost of producing cheese is lower in Switzerland.
C) The opportunity cost of producing watches is the same in both countries.
D) It is impossible to compare costs because the two countries are not the same size.
E) In Germany,the cost of a pound of cheese is one watch.

Accepted Answer

The answer of For each watch Switzerland produces,it gives up...

Question 8

Comparative advantage is determined by the
A) elasticities of demand for a good in two countries
B) opportunity costs of producing a good in two different countries
C) presence of absolute advantages in production
D) degrees of allocative efficiency within each economy
E) amounts of resources required to produce a good in different countries

Accepted Answer

Comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than another country. Opportunity cost is the cost of giving up one good in order to produce another. Therefore, comparative advantage is determined by the opportunity costs of producing a good in two different countries.

Question 9

Given an opportunity cost of 10 bicycles per 1 sewing machine in Germany and 20 bicycles per 2 sewing machines in Hungary,
A) Neither country has a comparative advantage in the production of either good.
B) Germany has a comparative advantage in the production of sewing machines.
C) Germany has an absolute advantage in the production of sewing machines.
D) Hungary has an absolute advantage in the production of bicycles.
E) Hungary produces more bicycles than Germany does.

Accepted Answer

The answer of Given an opportunity cost of 10 bicycles...

Question 10

Assume Japan must forego producing 60 computers for each automobile it produces.Moreover,the United States can produce one automobile if it forgoes producing 80 computers.Which of the following is true?
A) The United States has a lower opportunity cost of producing automobiles.
B) The United States has a comparative advantage in producing automobiles.
C) Japan has a comparative advantage in producing computers.
D) No trade will occur between Japan and the United States.
E) Japan has a lower opportunity cost of producing automobiles.

Accepted Answer

The answer of Assume Japan must forego producing 60 computers...

Question 11

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the maximum number of statues that could be produced in one hour is
A) 50
B) 100
C) 80
D) 25
E) 160

Accepted Answer

The answer of In a Mexican factory,each worker can produce...

Question 12

-In Figure 16-2,if Colombia produces four fewer calculators,then how many more radios could it produce?
A) 8
B) 2
C) 16
D) 4
E) 12

Accepted Answer

The answer of 
-In Figure 16-2,if Colombia produces four fewer...

Question 13

If Canada can produce 500 TV sets at the cost of 10 cars,while Mexico can produce 1,000 TV sets at the cost of 8 cars,we know the following:
A) Canada has a comparative advantage in TV production.
B) Mexico has the absolute advantage in TV production.
C) The two countries' joint output equals 1,500 TV sets and 18 cars without trade,but it will be higher after proper specialization and trade.
D) Canada has a comparative advantage in car production.
E) Canada produces more cars than Mexico does.

Accepted Answer

The answer of If Canada can produce 500 TV sets...

Question 14

-In Figure 16-3,the opportunity cost in Costa Rica of producing one additional bicycle is
A) 10 rugs
B) 20 rugs
C) 4 rugs
D) 5 rugs
E) 1/5 of a rug

Accepted Answer

The answer of 
-In Figure 16-3,the opportunity cost in Costa...

Question 15

-In Figure 16-2,what can be said regarding comparative advantage?
A) Colombia has a comparative advantage in producing radios.
B) Korea has a comparative advantage in producing both radios and calculators.
C) Korea has a comparative advantage in producing calculators.
D) Colombia has a comparative advantage in producing calculators.
E) Colombia has a comparative advantage in producing both radios and calculators.

Accepted Answer

The answer of 
-In Figure 16-2,what can be said regarding...

Question 16

-In Figure 15-3,the opportunity cost in Panama of producing one additional rug is
A) 4 bicycles
B) 5 bicycles
C) 1/4 of a bicycle
D) 1/5 of a bicycle
E) 2 bicycles

Accepted Answer

The answer of 
-In Figure 15-3,the opportunity cost in Panama...

Question 17

-In Figure 16-3,if Costa Rica and Panama have identical resources,then Panama has a(n)
A) absolute advantage only in producing bicycles
B) comparative advantage in producing both bicycles and rugs
C) absolute advantage only in producing rugs
D) comparative advantage only in producing rugs
E) absolute advantage in producing both rugs and bicycles

Accepted Answer

The answer of 
-In Figure 16-3,if Costa Rica and Panama...

Question 18

For each watch Denmark produces,it gives up the opportunity to produce 50 pounds of cheese.France can produce two watches at a cost of 150 pounds of cheese.Which of the following is true?
A) Denmark has a comparative advantage in producing both watches and cheese.
B) France has a comparative advantage in producing both watches and cheese.
C) France has the comparative advantage in producing watches.
D) Denmark has the comparative advantage in producing watches.
E) Denmark has the comparative advantage in producing cheese.

Accepted Answer

The answer of For each watch Denmark produces,it gives up...

Question 19

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one vase is
A) 2 statues
B) 8 statues
C) 1/2 of a statue
D) 16 statues
E) 1/16 of a statue

Accepted Answer

The answer of In a Mexican factory,each worker can produce...

Question 20

Consider the following table on labor hours needed per unit of output:  Ignoring nonlabor inputs,which of the following statements is correct?
A) All of the following are correct.
B) The opportunity cost of a computer equals 1/4 unit of wine in Italy.
C) The opportunity cost of a computer equals 1/2 unit of wine in France.
D) Italy has a comparative advantage in computers.
E) Italy has a comparative advantage in wine.

Accepted Answer

The answer of Consider the following table on labor hours...

Quiz 16: Comparative Advantage and the Gains From International Trade

Consider the following table on output producible per 100 labor hours: Which of the following statements is correct?

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the maximum number of vases that could be produced in one hour is

-In Figure 16-2,if Korea produces two fewer radios,then how many more calculators could it produce?

Consider the following information on labor hours needed per unit of output: Ignoring nonlabor inputs,which of the following statements is correct?

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one statue is

Suppose that for each automobile Japan produces it must forego producing 40 computers.The United States must forego producing 80 computers for each automobile it produces.Which of the following is true?

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

Comparative advantage is determined by the

Given an opportunity cost of 10 bicycles per 1 sewing machine in Germany and 20 bicycles per 2 sewing machines in Hungary,

Assume Japan must forego producing 60 computers for each automobile it produces.Moreover,the United States can produce one automobile if it forgoes producing 80 computers.Which of the following is true?

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the maximum number of statues that could be produced in one hour is

-In Figure 16-2,if Colombia produces four fewer calculators,then how many more radios could it produce?

If Canada can produce 500 TV sets at the cost of 10 cars,while Mexico can produce 1,000 TV sets at the cost of 8 cars,we know the following:

-In Figure 16-3,the opportunity cost in Costa Rica of producing one additional bicycle is

-In Figure 16-2,what can be said regarding comparative advantage?

-In Figure 15-3,the opportunity cost in Panama of producing one additional rug is

-In Figure 16-3,if Costa Rica and Panama have identical resources,then Panama has a(n)

For each watch Denmark produces,it gives up the opportunity to produce 50 pounds of cheese.France can produce two watches at a cost of 150 pounds of cheese.Which of the following is true?

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one vase is

Consider the following table on labor hours needed per unit of output: Ignoring nonlabor inputs,which of the following statements is correct?