Question 1

Use the following to answer questions : $\text {Table: The Production Possibilities for Cars and Leather Boots}$
$\begin{array}{l}
\hline  \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Leather Boots }\
\begin{array}{lcc}
{\text { Country }} & \text { Cars } & \text { (in thousands of pairs) } \
\hline \text { United States } & 80 & 40 \
\hline \text { Mexico } & 60 & 30 \
\hline
\end{array}
\end{array}$

-(Table: The Production Possibilities for Cars and Leather Boots)Use Table: The Production Possibilities for Cars and Leather Boots.The opportunity cost of producing one car in Mexico is:

Accepted Answer

A

Question 2

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

Accepted Answer

The opportunity cost of producing 1 sweater is 75 hats / 25 sweaters = 3 hats. Therefore, the opportunity cost of producing 4 sweaters is 4 sweaters * 3 hats/sweater = 12 hats.

Question 3

If the opportunity costs of production are constant,then the production possibility frontier is:

Accepted Answer

If the opportunity costs of production are constant, it means that the trade-off between producing two different goods remains the same regardless of the quantity produced. This results in a linear production possibility frontier, where the opportunity cost of producing one good in terms of the other is constant.

Question 4

In a single year,the Netherlands can raise 100 tonnes of beef or produce 1 000 boxes of tulips.In the same growing season,Belgium can raise 50 tonnes of beef or produce 750 boxes of tulips.In autarky,the opportunity cost of 1 tonne of beef in the Netherlands is:

Accepted Answer

In the Netherlands, the opportunity cost of 1 tonne of beef is 10 boxes of tulips (since they can produce either 100 tonnes of beef or 1,000 boxes of tulips in a year). In Belgium, the opportunity cost of 1 tonne of beef is 15 boxes of tulips (since they can produce either 50 tonnes of beef or 750 boxes of tulips in a year). Since the Netherlands has a lower opportunity cost of producing tulips (10 boxes per tonne of beef) than Belgium (15 boxes per tonne of beef), it is more efficient for the Netherlands to produce tulips and for Belgium to produce beef. Therefore, the best choice is to produce tulips in the Netherlands and trade with Belgium for beef, resulting in greater overall output and efficiency.

Question 5

As measured by a percentage of the entire economic output:

Accepted Answer

Canada is heavily dependent on foreign trade, which accounts for approximately 65% of its GDP. This is higher than most other countries and makes foreign trade more important for Canada than it is for most other nations.

Question 6

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

Accepted Answer

Since Canada must give up the production of 500 bicycles to produce 20 additional tractors, the opportunity cost of producing 1 tractor is 25 bicycles (500 bicycles/20 tractors). Therefore, the opportunity cost of producing 100 bicycles is 4 tractors (100 bicycles/25 bicycles per tractor = 4 tractors). Therefore, the best choice for the opportunity cost of producing 100 bicycles is B.

Question 7

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

Accepted Answer

The opportunity cost of producing 3 hats is 1 sweater because Britain must give up the production of 75 hats to produce 25 additional sweaters, so for every 3 hats (75/25 = 3), 1 sweater is the opportunity cost.

Question 8

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

Accepted Answer

The absolute value of the slope of the production possibility frontier (PPF) at any point represents the opportunity cost of producing one more unit of the good on the horizontal axis in terms of the quantity of the good on the vertical axis that must be given up. This is a fundamental concept in economics that illustrates the trade-offs in production choices.

Question 9

Production possibility frontiers:

Accepted Answer

Production possibility frontiers illustrate the different production choices available to an economy, showing the different combinations of two goods that can be produced with the given resources and technology.

Question 10

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

Accepted Answer

The Ricardian model, developed by economist David Ricardo, assumes that opportunity costs are constant and production possibility frontiers are straight lines. The model also assumes that there are two countries producing two goods with different efficiencies, leading to gains from trade. The other options do not make this assumption.

Question 11

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

Accepted Answer

Goods and services purchased from abroad are termed as imports, while goods and services sold abroad are termed as exports. Therefore, option D is the correct answer.

Question 12

The term autarky refers to a situation when a country:

Accepted Answer

Autarky refers to a situation where a country does not trade with other countries and relies solely on its own resources to meet its needs.

Question 13

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

Accepted Answer

Comparative advantage is based on opportunity costs, therefore the country with the lower opportunity cost will have the comparative advantage in producing that good. Thus, France will have a comparative advantage in wine production if the opportunity cost of wine production is lower in France than in England.

Question 14

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 _____.

Accepted Answer

In a Ricardian model of international trade, the production possibility frontiers are straight lines, indicating that the opportunity cost of increasing the production of one item relative to another is constant. This reflects the assumption of constant returns to scale.

Question 15

On a production possibility frontier,opportunity cost is:

Accepted Answer

Opportunity cost refers to the trade-off between two goods when producing one or the other. On a production possibility frontier, if we increase the production of one good, the production of the other good must decrease. This is the opportunity cost of choosing to produce more of one good. Therefore, the decrease in the output of one good when the output of the other good is increased is the opportunity cost on a production possibility frontier.

Question 16

In a single year,the Netherlands can raise 100 tonnes of beef or produce 1 000 boxes of tulips.In the same growing season,Belgium can raise 50 tonnes of beef or produce 750 boxes of tulips.From this information,we know that:

Accepted Answer

The answer of In a single year,the Netherlands can raise...

Question 17

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:

Accepted Answer

England has a lower opportunity cost of producing cloth, as it can produce 100 bolts of cloth compared to France's 100 bolts only at the cost of giving up on producing 50 barrels of wine. Therefore, England has a comparative advantage in cloth production. France has a comparative advantage in wine production, as it can produce 150 barrels of wine compared to England's 50 barrels only at the cost of giving up on producing 100 bolts of cloth. Since both countries have a comparative advantage in different goods, mutually beneficial international trade is possible.

Question 18

In a single year,the Netherlands can raise 100 tonnes of beef or produce 1 000 boxes of tulips.In the same growing season,Belgium can raise 50 tonnes of beef or produce 750 boxes of tulips.In autarky,the opportunity cost of beef:

Accepted Answer

The answer of In a single year,the Netherlands can raise...

Question 19

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

Accepted Answer

To produce 20 tractors, Canada must give up 500 bicycles. Therefore, the opportunity cost of producing 1 tractor is:

500 bicycles / 20 tractors = 25 bicycles per tractor

To produce 5 tractors, the opportunity cost is:

25 bicycles per tractor × 5 tractors = 125 bicycles.

Therefore, the answer is D.

Question 20

Use the following to answer questions : $\text {Table: The Production Possibilities for Cars and Leather Boots}$
$\begin{array}{l}
\hline  \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Leather Boots }\
\begin{array}{lcc}
{\text { Country }} & \text { Cars } & \text { (in thousands of pairs) } \
\hline \text { United States } & 80 & 40 \
\hline \text { Mexico } & 60 & 30 \
\hline
\end{array}
\end{array}$

-(Table: The Production Possibilities for Cars and Leather Boots)Use Table: The Production Possibilities for Cars and Leather Boots.Given the opportunity costs of production:

Accepted Answer

The answer of Use the following to answer questions :...

Quiz 8: International Trade