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Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one cashew? A) 1/10 hour B) 1/3 hour C) 3 hours D) 10 hours -Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one cashew?


A) 1/10 hour
B) 1/3 hour
C) 3 hours
D) 10 hours

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

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If Korea is capable of producing either shoes or soccer balls or some combination of the two, then


A) Korea should specialize in the product in which it has an absolute advantage.
B) it would be impossible for Korea to have an absolute advantage over another country in both products.
C) it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods.
D) Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

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

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When can two countries gain from trading two goods?


A) when the first country can only produce the first good and the second country can only produce the second good
B) when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost
C) when the first country is better at producing both goods and the second country is worse at producing both goods
D) Two countries could gain from trading two goods under all of the above conditions.

E) A) and B)
F) All of the above

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Which of the following is not an example of the principle that trade can make everyone better off?


A) Americans buy tube socks from China.
B) Residents of Maine drink orange juice from Florida.
C) A homeowner hires the kid next door to mow the lawn.
D) All of the above are examples of the principle that trade can make everyone better off.

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

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Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that A) for Brazil, it is more costly to produce peanuts than it is to produce cashews. B) Brazil will produce more peanuts and fewer cashews as time goes by. C) Brazil faces a tradeoff between producing peanuts and producing cashews. D) Brazil should specialize in producing cashews. -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that


A) for Brazil, it is more costly to produce peanuts than it is to produce cashews.
B) Brazil will produce more peanuts and fewer cashews as time goes by.
C) Brazil faces a tradeoff between producing peanuts and producing cashews.
D) Brazil should specialize in producing cashews.

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

Correct Answer

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Use the following Figure to answer the question : Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier Use the following Figure to answer the question : Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Hosne has an absolute advantage in the production of A) purses and Merve has an absolute advantage in the production of wallets. B) wallets and Merve has an absolute advantage in the production of purses. C) both goods and Merve has an absolute advantage in the production of neither good. D) neither good and Merve has an absolute advantage in the production of both goods. -Refer to Figure 3-16. Hosne has an absolute advantage in the production of


A) purses and Merve has an absolute advantage in the production of wallets.
B) wallets and Merve has an absolute advantage in the production of purses.
C) both goods and Merve has an absolute advantage in the production of neither good.
D) neither good and Merve has an absolute advantage in the production of both goods.

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

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Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier Use the following Figure to answer the question : Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months? A) 5 peanuts and 88 cashews B) 4 peanuts and 115 cashews C) 3 peanuts and 155 cashews D) 1 peanuts and 200 cashews -Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months?


A) 5 peanuts and 88 cashews
B) 4 peanuts and 115 cashews
C) 3 peanuts and 155 cashews
D) 1 peanuts and 200 cashews

E) None of the above
F) A) and B)

Correct Answer

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Use the following Table to answer the question : Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. Use the following Table to answer the question : Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. -Refer to Table 3-23. The farmer should specialize in the production of A) pork and the rancher should specialize in the production of tomatoes. B) tomatoes and the rancher should specialize in the production of pork. C) both goods and the rancher should specialize in the production of neither good. D) neither good and the rancher should specialize in the production of both goods. -Refer to Table 3-23. The farmer should specialize in the production of


A) pork and the rancher should specialize in the production of tomatoes.
B) tomatoes and the rancher should specialize in the production of pork.
C) both goods and the rancher should specialize in the production of neither good.
D) neither good and the rancher should specialize in the production of both goods.

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

Correct Answer

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Use the following Table to answer the question : Table 3-38 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. Use the following Table to answer the question : Table 3-38 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-38. Spain should export A) cheese and import bread. B) bread and import cheese. C) both goods and import neither good. D) neither good and import both goods. -Refer to Table 3-38. Spain should export


A) cheese and import bread.
B) bread and import cheese.
C) both goods and import neither good.
D) neither good and import both goods.

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

Correct Answer

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Use the following Figure to answer the question : Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier Use the following Figure to answer the question : Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of A) bolts and a comparative advantage in the production of bolts. B) bolts and a comparative advantage in the production of nails. C) nails and a comparative advantage in the production of bolts. D) nails and a comparative advantage in the production of nails. -Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of


A) bolts and a comparative advantage in the production of bolts.
B) bolts and a comparative advantage in the production of nails.
C) nails and a comparative advantage in the production of bolts.
D) nails and a comparative advantage in the production of nails.

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

Correct Answer

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Use the following Figure to answer the question : Figure 3-23 The graph below represents the various combinations of ham and cheese in pounds) that the nation of Bonovia could produce in a given month. Use the following Figure to answer the question : Figure 3-23 The graph below represents the various combinations of ham and cheese in pounds) that the nation of Bonovia could produce in a given month. -Refer to Figure 3-23. For Bonovia, what is the opportunity cost of a pound of cheese? A) 0.8 pounds of ham B) 1.25 pounds of ham C) 8 pounds of ham D) 16 pounds of ham -Refer to Figure 3-23. For Bonovia, what is the opportunity cost of a pound of cheese?


A) 0.8 pounds of ham
B) 1.25 pounds of ham
C) 8 pounds of ham
D) 16 pounds of ham

E) None of the above
F) A) and B)

Correct Answer

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Use the following Table to answer the question : Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. Use the following Table to answer the question : Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. -Refer to Table 3-21. Jamaica's opportunity cost of one cooler is A) 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios. B) 0.5 radios, and Norway's opportunity cost of one cooler is 8 radios. C) 2 radios, and Norway's opportunity cost of one cooler is 0.125 radios. D) 2 radios, and Norway's opportunity cost of one cooler is 8 radios. -Refer to Table 3-21. Jamaica's opportunity cost of one cooler is


A) 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios.
B) 0.5 radios, and Norway's opportunity cost of one cooler is 8 radios.
C) 2 radios, and Norway's opportunity cost of one cooler is 0.125 radios.
D) 2 radios, and Norway's opportunity cost of one cooler is 8 radios.

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

Correct Answer

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Use the following Table to answer the question : Table 3-35 Use the following Table to answer the question : Table 3-35 -Refer to Table 3-35. Denmark's opportunity cost of producing 1dozen eggs is A) 5/4 pounds of ham. This is higher than Finland's opportunity cost of producing 1dozen eggs. B) 5/4 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs. C) 4/5 pounds of ham. This is higher than Finland's opportunity cost of producing 1 dozen eggs. D) 4/5 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs. -Refer to Table 3-35. Denmark's opportunity cost of producing 1dozen eggs is


A) 5/4 pounds of ham. This is higher than Finland's opportunity cost of producing 1dozen eggs.
B) 5/4 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs.
C) 4/5 pounds of ham. This is higher than Finland's opportunity cost of producing 1 dozen eggs.
D) 4/5 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs.

E) All of the above
F) B) and D)

Correct Answer

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Use the following Table to answer the question : Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. Use the following Table to answer the question : Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-27. The opportunity cost of 1 parasol for Min is A) 1/3 plate. B) 1/2 plate. C) 2 plates. D) 3 plates. -Refer to Table 3-27. The opportunity cost of 1 parasol for Min is


A) 1/3 plate.
B) 1/2 plate.
C) 2 plates.
D) 3 plates.

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

Correct Answer

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Use the following Figure to answer the question :Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier Use the following Figure to answer the question :Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day? A) 2 pies and 25 tarts B) 10 pies and 22 tarts C) 12 pies and 15 tarts D) 15 pies and 16 tarts -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?


A) 2 pies and 25 tarts
B) 10 pies and 22 tarts
C) 12 pies and 15 tarts
D) 15 pies and 16 tarts

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

Correct Answer

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Use the following Table to answer the question : Table 3-39 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. Use the following Table to answer the question : Table 3-39 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-39. Japan should specialize in the production of A) cars and import airplanes. B) airplanes and import cars. C) both goods and import neither good. D) neither good and import both goods. -Refer to Table 3-39. Japan should specialize in the production of


A) cars and import airplanes.
B) airplanes and import cars.
C) both goods and import neither good.
D) neither good and import both goods.

E) All of the above
F) A) and B)

Correct Answer

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The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

A) True
B) False

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Use the following Table to answer the question : Table 3-31 Use the following Table to answer the question : Table 3-31 -Refer to Table 3-31. For the farmer, 12.8 pounds of A) meat is the opportunity cost of 10.6 pounds of potatoes. B) meat is the opportunity cost of 16.0 pounds of potatoes. C) potatoes is the opportunity cost of 6.8 pounds of meat. D) potatoes is the opportunity cost of 8.0 pounds of meat. -Refer to Table 3-31. For the farmer, 12.8 pounds of


A) meat is the opportunity cost of 10.6 pounds of potatoes.
B) meat is the opportunity cost of 16.0 pounds of potatoes.
C) potatoes is the opportunity cost of 6.8 pounds of meat.
D) potatoes is the opportunity cost of 8.0 pounds of meat.

E) All of the above
F) C) and D)

Correct Answer

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If Shawn can produce donuts at a lower opportunity cost than Sue, then


A) Shawn has a comparative advantage in the production of donuts.
B) Sue has a comparative advantage in the production of donuts.
C) Shawn should not produce donuts.
D) Shawn is capable of producing more donuts than Sue in a given amount of time.

E) All of the above
F) A) and B)

Correct Answer

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If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that


A) if he devotes all of his available resources to watermelon production, then he can produce 80 watermelons.
B) he cannot have a comparative advantage over other farmers in producing cantaloupes.
C) his opportunity cost of one watermelon is 2/3 of a cantaloupe.
D) his production possibilities frontier is bowed-out.

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

Correct Answer

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