1) When a country has a comparative advantage in producing a certain good,
a.the country should import that good.
b.the country should produce just enough of that good for its own consumption.
c.the country’s opportunity cost of that good is high relative to other countries’
opportunity costs of that same good.
d.None of the above is correct.
2) Some economists hypothesize that international trade has altered the relative demand
for skilled and unskilled labor, changing the gap in earnings between these two groups.
Which of the following statements best describes this hypothesis?
a.Unskilled labor is plentiful and cheap in the US, so the US tends to export goods
produced with unskilled labor and import goods produced with skilled labor.
b.Unskilled labor is plentiful and cheap in many foreign countries, so the US tends to
import goods produced with unskilled labor and export goods produced with skilled
labor.
c.Computers raise the demand for skilled workers and reduce the demand for the
unskilled workers whose jobs are replaced by the computers.
d.Greater demand for skilled labor has led to higher wages for those workers and
greater demand for imported products.
3) Figure 20-3
Refer to Figure 20-3. In 2011, the percent of elderly aged 65 and over in poverty is
a.higher than both the percentage of adults aged 18 to 64 and the percentage of children
under age 18 in poverty.
b.higher than the percentage of adults aged 18 to 64 but is lower than the percentage of
children under age 18 in poverty.
c.lower than both the percentage of adults aged 18 to 64 and the percentage of children
under age 18 in poverty.
d.lower than the percentage of children under age 18 but is equal to the percentage of
adults aged 18 to 64 in poverty.
4) If the for two goods is -4.5, then
a.the two goods are substitutes.
b.the two goods are complements.
c.one of the goods is normal while the other good is inferior.
d.one of the goods is a luxury while the other good is a necessity.
5) Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation,
the quantity of saddles imported decreases by
a.Q2 – Q1.
b.Q3 – Q2.
c.Q4 – Q3.
d.Q4 – Q3 + Q2 – Q1.
6) During the 1990s, the members of OPEC operated independently from one another,
causing the world market for crude oil to become close to
a.a monopoly market.
b.an oligopoly market.
c.a duopoly market.
d.a competitive market.
7) A rational pricing strategy for a profit-maximizing monopolist is
a.price discrimination.
b.price segregation.
c.synergy pricing.
d.average cost pricing.
8) Tom Brady should pay someone else to mow his lawn instead of mowing it himself,
unless
a.Brady has an absolute advantage over everyone else in mowing his lawn.
b.Brady has a comparative advantage over everyone else in mowing his lawn.
c.Brady’s opportunity cost of mowing his lawn is higher than it is for everyone else.
d.All of the above are correct.
9) Milk has an inelastic demand, and beef has an elastic demand. Suppose that a
mysterious increase in bovine infertility decreases both the population of dairy cows
and the population of beef cattle by 50 percent.
The change in equilibrium price will be
a.greater in the milk market than in the beef market.
b.greater in the beef market than in the milk market.
c.the same in the milk and beef markets.
d.Any of the above could be correct.
10) A benefit of a monopoly is
a.lower prices.
b.a wide variety of similar products.
c.decreasing long-run average total costs.
d.greater creativity by authors who can copyright their novels.
11) Refer to Figure 9-15. Producer surplus with the tariff is
a.G.
b.C + G.
c.A + C + G.
d.A + B + C + G.
12) If consumers purchase more of a good when their income rises, the good is a
normal good.
a.True
b.False