61) In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25
connections or inspect 20 parts in an hour.
A) Jane has a comparative advantage over Jim in both soldering and inspecting.
B) Jane has a comparative advantage over Jim in soldering while Jim has a comparative
advantage in inspecting.
C) Jim has a comparative advantage over Jane in soldering while Jane has a comparative
advantage in inspecting.
D) Jim had a comparative advantage over Jane in both soldering and inspecting.
62) Country A can product 100 units of Good X in a day and 40 units of Good Y while Country
B can produce 50 units of Good X and 40 units of Good Y.
A) These countries will not trade since Country A has a comparative advantage in the production
of both goods.
B) These countries will not trade since Country A will always be able to take advantage of
Country B.
C) These countries should trade since Country A has a comparative advantage in the production
of Good X and Country B has a comparative advantage in the production of Good Y.
D) These countries should trade since Country B has a comparative advantage in the production
of Good X and Country A has a comparative advantage in the production of Good Y.
Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
Product Country X Country Y
A 4 8
B 4 4
63) Refer to the above table. If opportunity costs are constant, then the opportunity cost of
producing good B in country X is ________, and the opportunity cost of producing good B in
country Y is ________.
A) 1 unit of A; 2 units of A
B) 1 unit of A; 0.5 unit of A
C) 1 unit of B; 2 units of A
D) 1 unit of A; 0.5 unit of B
64) Refer to the above table. If opportunity costs are constant, each nation produces only the one
good for which it has a comparative advantage, and trade can occur between the two countries
A) country X will produce product A and country Y will produce product B.
B) country X will produce product B and country Y will produce product A.
C) country X will refuse to trade with country Y since country X has a comparative advantage in
both products.
D) country Y will refuse to trade with country X since country Y has a comparative advantage in
both products.
65) Refer to the above table. If opportunity costs are constant and both countries produce only
the goods for which they have comparative advantages and then trade, hourly world output
would equal
A) 4 units of product A and 4 units of product B.
B) 8 units of product A and 4 units of product B.
C) 8 units of product A and 8 units of product B.
D) 12 units of product A and 8 units of product B.
66) Refer to the above table. Assuming constant opportunity costs
A) Country X has a comparative advantage in the production of both goods.
B) Country Y has a comparative advantage in the production of both goods.
C) Country X has a comparative advantage in the production of Product A while Country Y has
a comparative advantage in the production of Product B.
D) Country Y has a comparative advantage in the production of Product A while Country X has
a comparative advantage in the production of Product B.
67) Refer to the above table. Assuming constant opportunity costs
A) neither country will be willing to engage in trade at any rate of exchange of product A for
product B.
B) both countries will be willing to engage in trade at a rate of exchange of 0.3 unit of product A
for 1 unit of product B.
C) both countries will be willing to engage in trade at a rate of exchange of 3 units of product A
for 1 unit of product B.
D) both countries will be willing to engage in trade at a rate of exchange of 1.5 unit of product A
for 1 unit of product B.
Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
Product United States China
Computers 8 3
Bicycles 2 6
68) Refer to the above table. Assuming that opportunity costs are constant, the opportunity cost
of producing a computer in the United States is equal to ________, and the opportunity cost of
producing a computer in China is ________.
A) 4 bicycles; 0.5 bicycles
B) 0.25 bicycle; 2 bicycles
C) 2.67 computers; 0.33 bicycles
D) 0.375 bicycle; 3 computers
69) Refer to the above table. Assuming that opportunity costs are constant, the opportunity cost
of producing a bicycle in the United States is equal to ________, and the opportunity cost of
producing a bicycle in China is ________.
A) 4 computers; 0.5 computer
B) 0.25 computer; 2 computers
C) 2.67 bicycles; 0.33 computers
D) 0.375 computer; 3 bicycles
70) Refer to the above table. Assuming that opportunity costs are constant, which of the
following is a correct statement?
A) The United States has a comparative advantage in computers.
B) The United States has a comparative advantage in bicycles.
C) China has a comparative advantage in computers.
D) China has a comparative advantage in both goods.
71) Refer to the above table. If opportunity costs are constant and the two countries trade
A) the United States should specialize in computers and China in bicycles.
B) the United States should specialize in bicycles and China in computers.
C) the United States should specialize in both bicycles and computers, and China should
specialize in neither.
D) there will be no trade because they are so different.
72) Refer to the above table. If opportunity costs are constant, the two countries will gain from
trade at a rate of exchange of
A) 0.1 computer for 1 bicycle.
B) 5 computers for 1 bicycle.
C) 1 computer for 1 bicycle.
D) 8 bicycles for 1 computer.
Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
Product United States Canada
Computers 8 10
Bicycles 4 2
73) Refer to the above table. Assuming constant opportunity costs, the opportunity cost of
producing a computer in the United States is ________ while the opportunity cost of producing a
computer in Canada is ________.
A) 0.8 bicycle; 2 computers
B) 2.5 computers; 0.25 bicycle
C) 0.5 bicycle; 0.2 bicycle
D) 2 bicycles; 5 bicycles
74) Refer to the above table. Assuming constant opportunity costs, the opportunity cost of
producing a bicycle in the United States is ________ while the opportunity cost of producing a
bicycle in Canada is ________.
A) 8 computers; 10 computer
B) 4 computers; 10 computers
C) 5 computers; 2 computers
D) 2 computers; 5 computers
75) Refer to the above table. It may be concluded that
A) Canada has a comparative advantage in computer production.
B) Canada has a comparative advantage in bicycle production.
C) The United States has a comparative advantage in producing both goods.
D) The United States has a comparative advantage in producing neither good.
76) Refer to the above table. It may be concluded that
A) The United States will exports computers and import bicycles.
B) Canada will exports computers and import bicycles.
C) The United States will export both goods.
D) The United States will import both goods.
77) Refer to the above table. If opportunity costs are constant, then the United States and Canada
will produce goods in which they have a comparative advantage and trade at a rate of exchange
of
A) 4 computers for 1 bicycle.
B) 6 computers for 1 bicycle.
C) 0.1 computer for 1 bicycle.
D) 1 computer for 1 bicycle.
Maximum Feasible Hourly Production Rates of Either
Cuckoo Clocks or Movies Using All Available Resources
Product United States Switzerland
Cuckoo Clocks 4 2
Movies 10 4
78) Based on the data in the above table, then if opportunity costs are constant, the opportunity
cost of producing movies in the United States is ________, and the opportunity cost of producing
movies in Switzerland is ________.
A) 2 movies; 2 cuckoo clocks
B) 2.5 movies; 0.4 cuckoo clocks
C) 0.4 cuckoo clocks; 0.5 cuckoo clocks
D) 2.5 cuckoo clocks; 2 cuckoo clocks
79) Refer to the above table. If opportunity costs are constant, residents of the United States will
gain from specializing and trading with Switzerland if the
A) produce both clocks and films and export clocks to Switzerland.
B) produce both clocks and films and export both to Switzerland.
C) import films and export clocks to Switzerland.
D) import clocks and export films.
80) Assume that maximum feasible hourly productions levels if all resources are utilized in the
United States are either 3 yards of fabric or 9 bushels of wheat. Maximum feasible production
levels if all resources are utilized in Japan are either 6 yards of fabric or 12 bushels of wheat.
Based on this information
A) beneficial trade is absolutely impossible between the two countries.
B) the United States will benefit from trading but Japan will not.
C) both nations will gain from specialization and trade, with the United States exporting wheat
and Japan exporting fabric.
D) Japan should specialize in both products.
The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources
U.S. Switzerland
Product (Worker-Days) (Worker-Days)
Cuckoo Clocks 8 6
Movies 12 4
81) Based on the data in the above table, then if opportunity costs are constant, the opportunity
cost of producing one cuckoo clock in the United States is ________, and the opportunity cost of
producing one cuckoo clock in Switzerland is ________.
A) 3 movies; 1.33 cuckoo clocks
B) 0.33 movies; 0.67 cuckoo clocks
C) 0.67 movie; 1.5 movies
D) 1.5 movies; 0.67 movie
82) Refer to the above table. Assuming constant opportunity costs, which of the of the following
statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.
A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain
from exporting movies at this rate of exchange.
B) Swiss residents would be willing to export movies, but U.S. residents would not gain from
exporting cuckoo clocks at this rate of exchange.
C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting
cuckoo clocks at a rate of exchange.
D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from
exporting movies at a rate of exchange.
83) Assume that maximum feasible hourly productions levels if all resources are utilized in the
United States are either 8 yards of fabric or 4 bushels of wheat. Maximum feasible production
levels if all resources are utilized in Japan are either 3 yards of fabric or 6 bushels of wheat.
Based on this information
A) beneficial trade is absolutely impossible between the two countries.
B) the United States will benefit from trading but Japan will not.
C) both nations will gain from specialization and trade, with the United States exporting wheat
and Japan exporting fabric.
D) both nations will gain from specialization and trade, with the United States exporting fabric
and Japan exporting wheat.
84) Which of the following is a TRUE statement?
A) Everyone benefits from free trade.
B) Exporters benefit from trade and importers do not.
C) Consumers benefit from trade and producers do not.
D) Free trade harms domestic producers of goods that face import competition.
85) In order to obtain an efficient allocation of resources worldwide
A) countries that have a lot of resources should ship resources to countries that do not have a lot
of resources.
B) countries that have a lot of resources should not trade since poorer countries cannot compete.
C) each country should produce the good they have a comparative advantage in and then trade.
D) no trade among countries should occur.
86) Benefits of free trade include all of the following EXCEPT
A) increased world production.
B) higher standards of living.
C) transmission of new ideas.
D) increased international mobility of labor.
87) According to international trade theory
A) trade is based on absolute advantage.
B) comparative advantage is based on absolute advantage.
C) every country has a comparative advantage in something.
D) less developed countries cannot trade successfully with developed countries.
88) If Bob can produce completed mathematics homework assignments at a lower opportunity
cost than Jane can accomplish, then Bob has ________ in completing mathematics homework
assignments.
A) a relative advantage
B) an absolute advantage
C) a complete advantage
D) a comparative disadvantage
89) Which of the following is NOT a benefit of international trade?
A) It increases overall output.
B) It results in a transmission of ideas.
C) It promotes self-sufficiency.
D) It results in the transmission of new processes.
90) All of the following are reasons that trade between nations is beneficial EXCEPT
A) gains from specialization.
B) exchange of ideas.
C) protection of domestic industries.
D) gains from trade.
91) Comparative advantage is the ability, compared with another producer
A) to produce more of a product with the same resources.
B) to use fewer inputs to produce the same amount of a product.
C) to produce a higher-quality product with fewer resources.
D) to produce an additional unit of a product at lower opportunity cost.
92) The ability to produce a good or service at a lower opportunity cost than other producers is
A) absolute advantage.
B) comparative advantage.
C) opportunity advantage.
D) special advantage.
93) International trade is based on the existence of
A) absolute advantage.
B) perfect advantage.
C) productivity advantage.
D) comparative advantage.
Individual Opportunity Cost
Pramilla 2 units of good X to produce 1 unit of good Y
Sam 3 units of good X to produce 1 unit of good Y
George 4 units of good Y to produce 1 unit of good X
Lucas 5 units of good Y to produce 1 unit of good X
94) Consider the opportunity costs of producing goods X and Y that are listed for the four
individuals above. Which person has a comparative advantage in producing good X?
A) Pramilla
B) Sam
C) George
D) Lucas
95) Consider the opportunity costs of producing goods X and Y that are listed for the four
individuals above. Which person has a comparative advantage in producing good Y?
A) Pramilla
B) Sam
C) George
D) Lucas
96) The ability to produce a good at lower opportunity costs than another producer is known as
A) comparative advantage.
B) marginal cost production.
C) economies of scale.
D) absolute advantage.
97) Comparative advantage is based on the
A) concept that some countries are superior to others.
B) concept of absolute advantage of producing goods in different countries.
C) concept of relative opportunity cost of producing goods in different countries.
D) concept that some countries are better endowed with natural resources.
98) Countries engaged in international trade specialize in production based on
A) relative price levels.
B) relative foreign exchange rates.
C) comparative advantage.
D) the differences in transportation costs.
Maximum Feasible Hourly Production Rates (in Tons) of Either
Cookies or Coffee Using All Available Resources
Product Country Alpha Country Beta
Cookies 3 8
Coffee 9 4
99) Use the above table. Assuming constant opportunity costs, the opportunity cost of producing
cookies in country Alpha is ________, and the opportunity cost of producing cookies in country
Beta is ________.
A) 0.33 ton of coffee; 2 tons of coffee
B) 3 tons of coffee; 0.5 ton of coffee
C) 0.375 ton of cookies; 2.25 tons of coffee
D) 2.67 tons of coffee; 0.44 ton of cookies
100) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing coffee in country Alpha is ________, and the opportunity cost of producing coffee in
country Beta is ________.
A) 0.33 ton of cookies; 2 tons of cookies
B) 3 tons of cookies; 0.5 ton of cookies
C) 0.375 ton of coffee; 2.25 tons of cookies
D) 2.67 tons of cookies; 0.44 ton of coffee
101) Use the above table. If these two countries, Alpha and Beta, specialize based on
comparative advantage
A) Alpha will specialize in cookies, and Beta will specialize in coffee production.
B) Alpha will specialize in producing both items.
C) Beta will specialize in producing both items.
D) Alpha will specialize in coffee, and Beta will specialize in cookies.
Maximum Feasible Hourly Production Rates (in Tons) of Either
Knives or Forks Using All Available Resources
Product Country Alpha Country Beta
Knives 9 3
Forks 6 12
102) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing knives in country Alpha is ________, and the opportunity cost of producing knives in
country Beta is ________.
A) 2 forks; 0.33 knife
B) 0.5 knife; 3 forks
C) 1.5 forks; 0.25 fork
D) 0.67 fork; 4 forks
103) Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta
specialize based on comparative advantage, then
A) Alpha should specialize in knives and Beta should specialize in forks.
B) Alpha should specialize in forks and Beta should specialize in knives.
C) Alpha should specialize in producing both items.
D) Beta should produce both items.
104) Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta
specialize based on comparative advantage, then they will trade if the rate of exchange is
A) 5 knives for 1 fork, and Alpha imports forks.
B) 0.5 knives for 1 fork, and Alpha imports forks.
C) 0.5 fork for 1 knife, and Beta imports knives.
D) 6 forks for 1 knife, and Beta imports knives.
Maximum Feasible Hourly Production Rates (in Tons) of Either
Pizzas or Donuts Using All Available Resources
Product Country Alpha Country Beta
Pizzas 10 2
Donuts 10 12
105) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing donuts in country Alpha is ________, and the opportunity cost of producing donuts in
country Beta is ________.
A) 1 donut; 0.17 donut
B) 1 donut; 6 donuts
C) 10 donuts; 12 pizzas
D) 0.2 pizza; 1.67 donuts
106) According to the above table, Alpha has comparative advantage in producing
A) pizzas.
B) donuts.
C) both pizzas and donuts.
D) neither pizzas nor donuts.
Maximum Feasible Hourly Production Rates (in Tons) of Either
Wine or Beef Using All Available Resources
Product Argentina France
Wine (gallons) 30 60
Beef (pounds) 10 30
107) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing a gallon of wine in Argentina is
A) 0.33 pound of beef.
B) 0.5 pound of beef.
C) 2 pounds of beef.
D) 3 pounds of beef.
108) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing a pound of beef in Argentina is
A) 2 gallons of wine.
B) 3 gallons of wine.
C) 0.5 gallons of wine.
D) 0.33 gallons of wine.
109) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing a pound of beef in France is
A) 2 gallons of wine.
B) 3 gallons of wine.
C) 0.5 gallons of wine.
D) 0.33 gallons of wine.
110) Use the above table. Assuming constant opportunity costs, the opportunity cost of
producing a gallon of wine in France is
A) 0.33 pound of beef.
B) 0.5 pound of beef.
C) 2 pounds of beef.
D) 3 pounds of beef.
111) Use the above table. Assuming constant opportunity costs, a comparative advantage in
producing wine is possessed by
A) neither Argentina or France.
B) both Argentina and France.
C) Argentina.
D) France.
112) Use the above table. Assuming constant opportunity costs, a comparative advantage in
producing beef is possessed by
A) neither Argentina or France.
B) both Argentina and France.
C) Argentina.
D) France.
113) Use the above table. Assuming constant opportunity costs, if Argentina and France
specialize based on comparative advantage, then they will trade if the rate of exchange
A) is 2.5 gallons of wine for 1 pound of beef, and Argentina imports beef.
B) 4 gallons of wine for 1 pound of beef, and France imports beef.
C) 0.2 pound of beef for 1 gallon of wine, and Argentina imports wine.
D) 8 pounds of beef for 1 gallon of wine, and France imports wine.
114) Use the above table. Assuming constant opportunity costs, if Argentina and France
specialize based on comparative advantage, then they will trade if the rate of exchange
A) is 7 gallons of wine for 1 pound of beef, and Argentina imports beef.
B) 0.25 gallons of wine for 1 pound of beef, and France imports beef.
C) 0.25 pounds of beef for 1 gallon of wine, and Argentina imports wine.
D) 0.4 pounds of beef for 1 gallon of wine, and France imports wine.
115) Specialization allows for
A) more consumption for all trading partners.
B) more consumption for the trading partner with the comparative advantage.
C) more consumption for the trading partner with the absolute advantage.
D) equal consumption among trading partners.
116) An effect of international trade is
A) the increase in the average price of goods as the cost of transportation has to be included.
B) the transmission of ideas around the world.
C) that only countries that have absolute advantage in producing a good can participate.
D) that the United States has a trade surplus.
117) If the residents of a country specialize in a good in which they have a comparative
advantage and trade with residents in another nation, the residents in the first country
A) can consume more than they could without trade.
B) will produce less than they could without trade.
C) will have a lower standard of living.
D) will be exploited by the second nation.