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Exam 2: Specializationand Exchange

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Question 41

Multiple Choice

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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

E) B) and C)
F) A) and D)

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Question 42

Multiple Choice

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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.

E) C) and D)
F) None of the above

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Question 43

Multiple Choice

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Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Considering the production possibilities frontiers of both countries, we can conclude that Country B will specialize in _____ and be willing to _____ three cars for each truck.

If we consider the reality that each worker has different skills, then the production possibilities frontier:

Which of the following statements about trade 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. Country A has an absolute advantage at producing:

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. Which of the following is true?

If we consider the reality that each worker has different skills, then the production possibilities frontier should:

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country A specializes in producing bananas and Country B specializes in producing tomatoes. Regarding the terms of trade, Country A will give no _____ than _____ for every _____.

If society were to experience an increase in its available resources, its production possibilities frontier would:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. What terms of trade would both countries be willing to agree to?

Suppose the figure shown represents the production possibilities frontier for Country A. Country B offers to trade four trucks for every airplane. Assuming Country A specializes in airplane production, which of the following combinations of goods could Country A consume?

The invisible hand refers to the coordination that occurs from:

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. A bundle of goods that Country A could potentially make would be:

Consider a society facing the production possibilities frontiers in the figure shown. Out of the options provided, which is the most likely cause of a society moving from PPF ₁ to PPF ₃?

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Why are these graphs not realistic representations of actual countries?

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. Which of the following is true?

When a country loses its comparative advantage at producing a good it will:

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:

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. Jerry has a comparative advantage at producing _____ because he has a _____ opportunity cost of making that good.