Question 1

(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Belgium should specialize in linen production becauseit:

Accepted Answer

A)  has an absolute advantage in producing linen and pasta.
B)  can do so at a greater opportunity cost.
C)  has a comparative advantage in producing linen.
D)  already can produce enough pasta to meet demand.

Question 2

If a country has an absolute advantage in both items whencompared to another country, there can never be any benefitfor them to trade.

Accepted Answer

A) True 
 B)False

Question 3

Facilitators of trade (such as Pierre Omidyar, the developer ofeBay) :

Accepted Answer

A)  may become very rich since they are creating value for many individuals.
B)  find it very hard to profit from their services since they are not directly involved in the trades.
C)  typically only profit from their services if they are able to obtain government patent rights.
D)  are usually seen as taking advantage of consumers.

Question 4

Which of the following has NOT played a significant role inrecent developments leading to increased trade andglobalization?

Accepted Answer

A)  lower transportations costs
B)  theory of absolute advantage
C)  integration of world markets
D)  increased communication speed

Question 5

The opportunity cost of producing a particular good refers to:

Accepted Answer

A)  how much of something else must be given up to produce one additional unit of the good.
B)  how much of a good can be produced with the existing technology and resources.
C)  the total cost of production, including wages, for all units of the good.
D)  the marginal cost of production in order to produce one additional unit of the good.

Question 6

Trade increases productivity because trade allows people tospecialize.

Accepted Answer

A) True 
 B)False

Question 7

Trade tends to:

Accepted Answer

A)  increase wages in developed countries, but decrease wages in lesser-developed countries.
B)  decrease wages in developed countries, but increase wages in lesser-developed countries.
C)  decrease wages in all countries.
D)  increase wages in all countries.

Question 8

Jim has an old (working)  television that he would like to get ridof now that he has purchased a new high-definition, flat-screentelevision. The old television is no longer worth anything to himnow that he has his new flat-screen TV. Veronica on the otherhand has an even older television that has just broken down.She would pay up to $50 for any working TV. Which of thefollowing statements is NOT true?

Accepted Answer

A)  If Jim trades Veronica his old television for $50, total value in society increases by $50.
B)  If Jim trades Veronica his old television for $50, both are better off but total value in society does not increase.(TrueAnswer ) Correct
C)  If a middleman facilitates the $50 trade between Jim and Veronica, but takes a $10 finders' fee, Jim and Veronica willStill both be better off.
D)  If Jim and Veronica do not trade, both are worse off than if they did trade.

Question 9

Knowledge increases ____________ and specialization__________ total output.

Accepted Answer

A)  education; increases
B)  productivity; increases
C)  perception; increases
D)  economies of scale; decreases

Question 10

Which of the scenarios below best displays how internationaltrade allows for specialization?

Accepted Answer

A)  You are better at mowing lawns than your neighbor who is better at gardening.
B)  Truck drivers stay awake on long routes by drinking Colombian coffee.
C)  The United States and Canada can both produce lumber, but the U.S.buys lumber from Canada because it has a greaterYield per acre.
D)  Cuba does not have a comparative advantage in producing antibiotics, but due to economic sanctions, relies on its ownSupply of medicines.

Question 11

(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing oneclock in the United States is _________, and the opportunitycost of producing one clock in Germany is _______.

Accepted Answer

A)  five sofas; nine sofas
B)  0.4 sofas; 0.33 sofa
C)  five clocks; nine clocks
D)  2.5 clocks; three clocks

Question 12

According to the theory of comparative advantage, a countryspecializes in producing what it can produce for a loweropportunity cost than another country.

Accepted Answer

A) True 
 B)False

Question 13

The production possibilities frontier shows:

Accepted Answer

A)  the combinations of outputs a country can produce given its resources and productivity.
B)  the combinations of inputs that a country has given its outputs and productivity.
C)  the combinations of outputs and resources that a country possesses given its productivity.
D)  the maximum level of a country's productivity given its resources and outputs.

Question 14

Specialization and trade:

Accepted Answer

A)  increase the costs of production because of decreased output.
B)  decrease the per-unit costs of production because of economies of scale associated with large-scaleProduction.
C)  create diseconomies of scale, raising the per-unit costs of production.
D)  only work within countries, not across countries.

Question 15

If labor in China is less productive than labor in the UnitedStates in all areas of production, then:

Accepted Answer

A)  both the United States and China can benefit from trade.
B)  neither nation can benefit from trade.
C)  China can benefit from trade but not the United States.
D)  the United States can benefit from trade but not China

Question 16

If each of us had to grow our own food:

Accepted Answer

A)  civilization as we know it would collapse and billions of people would have much less food to eat.(True Answer) Correct
B)  we would have more time for other pursuits.
C)  people would be richer since they would no longer have to spend money on groceries.
D)  the total amount of knowledge in society would increase since everyone would have to learn about farming.

Question 17

The real cost of producing a good is:

Accepted Answer

A)  the dollar cost of inputs used to make the item.
B)  the opportunity cost of producing the good.(True Answer ) Correct
C)  the resources that were used to make the good.
D)  the dollar amount it costs to sell the good.

Question 18

(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Italy has comparative advantage in:

Accepted Answer

A)  both goods, while Belgium has comparative advantage in neither good.
B)  linen, while Belgium has comparative advantage in pasta.
C)  pasta, while Belgium has comparative advantage in linen.
D)  neither good, while Belgium has comparative advantage in both goods.

Question 19

Globalization is best described as:

Accepted Answer

A)  a new process that grows intermittently.
B)  an old process that has consistently grown.
C)  an old process that has grown intermittently.(True Answer ) Correct
D)  an old process that has declined over time.

Question 20

Angela and Ed are married. Angela can do $40 worth ofhousehold chores per hour, and Ed can do $15 worth ofhousehold chores per hour. In the labor market, Ed can earn$30/hour and Angela can earn $40/hour. The theory ofcomparative advantage suggests that:

Accepted Answer

A)  Ed should specialize in household production and Angela should specialize in market work.
B)  Angela should specialize in household production and Ed should specialize in market work.
C)  Angela should specialize in both household production and market work.
D)  Ed should specialize in both household production and market work.

Exam 2: Choice in a World of Scarcity

If each of us had to grow our own food:

Correct Answer
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(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Belgium should specialize in linen production becauseit:

Correct Answer
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(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing oneclock in the United States is ___, and the opportunitycost of producing one clock in Germany is _.

Correct Answer
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Which of the following has NOT played a significant role inrecent developments leading to increased trade andglobalization?

Correct Answer
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Facilitators of trade (such as Pierre Omidyar, the developer ofeBay) :

Correct Answer
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Knowledge increases __ and specialization total output.

Correct Answer
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The opportunity cost of producing a particular good refers to:

Correct Answer
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Angela and Ed are married. Angela can do $40 worth ofhousehold chores per hour, and Ed can do $15 worth ofhousehold chores per hour. In the labor market, Ed can earn$30/hour and Angela can earn $40/hour. The theory ofcomparative advantage suggests that:

Correct Answer
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Correct Answer
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According to the theory of comparative advantage, a countryspecializes in producing what it can produce for a loweropportunity cost than another country.

Correct Answer
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The real cost of producing a good is:

Correct Answer
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Trade tends to:

Correct Answer
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If a country has an absolute advantage in both items whencompared to another country, there can never be any benefitfor them to trade.

Correct Answer
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(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Italy has comparative advantage in:

Correct Answer
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If labor in China is less productive than labor in the UnitedStates in all areas of production, then:

Correct Answer
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Globalization is best described as:

Correct Answer
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The production possibilities frontier shows:

Correct Answer
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Specialization and trade:

Correct Answer
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Which of the scenarios below best displays how internationaltrade allows for specialization?

Correct Answer
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Trade increases productivity because trade allows people tospecialize.

Correct Answer
verified

Exam 2: Choice in a World of Scarcity

If each of us had to grow our own food:

Correct AnswerverifiedShow Answer

(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Belgium should specialize in linen production becauseit:

Correct AnswerverifiedShow Answer

(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing oneclock in the United States is _________, and the opportunitycost of producing one clock in Germany is _______.

Correct AnswerverifiedShow Answer

Which of the following has NOT played a significant role inrecent developments leading to increased trade andglobalization?

Correct AnswerverifiedShow Answer

Facilitators of trade (such as Pierre Omidyar, the developer ofeBay) :

Correct AnswerverifiedShow Answer

Knowledge increases ____________ and specialization__________ total output.

Correct AnswerverifiedShow Answer

The opportunity cost of producing a particular good refers to:

Correct AnswerverifiedShow Answer

Angela and Ed are married. Angela can do $40 worth ofhousehold chores per hour, and Ed can do $15 worth ofhousehold chores per hour. In the labor market, Ed can earn$30/hour and Angela can earn $40/hour. The theory ofcomparative advantage suggests that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to the theory of comparative advantage, a countryspecializes in producing what it can produce for a loweropportunity cost than another country.

Correct AnswerverifiedShow Answer

The real cost of producing a good is:

Correct AnswerverifiedShow Answer

Trade tends to:

Correct AnswerverifiedShow Answer

If a country has an absolute advantage in both items whencompared to another country, there can never be any benefitfor them to trade.

Correct AnswerverifiedShow Answer

(Table: Production Possibilities for Italy and Belgium) According to the table on Production Possibilities for Italy andBelgium, Italy has comparative advantage in:

Correct AnswerverifiedShow Answer

If labor in China is less productive than labor in the UnitedStates in all areas of production, then:

Correct AnswerverifiedShow Answer

Globalization is best described as:

Correct AnswerverifiedShow Answer

The production possibilities frontier shows:

Correct AnswerverifiedShow Answer

Specialization and trade:

Correct AnswerverifiedShow Answer

Which of the scenarios below best displays how internationaltrade allows for specialization?

Correct AnswerverifiedShow Answer

Trade increases productivity because trade allows people tospecialize.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing oneclock in the United States is ___, and the opportunitycost of producing one clock in Germany is _.

Correct Answer
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Correct Answer
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Correct Answer
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Knowledge increases __ and specialization total output.

Correct Answer
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