1 2 3 4 5 Goods and services purchased from abroad are while goods and services sold abroad are exports imports Incorrect imports exports True Answer Correct exports quotas Incorrect quotas factors Incorrect Over the past 40 years in the United States as a percentage of gross domestic product exports have grown and imports have remained constant Incorrect imports have grown and exports have remained constant Incorrect exports have decreased Incorrect exports and imports have grown True Answer Correct Which of the following is true of the trends for imports and exports as measured by a percentage of the entire economy in the United States Imports and exports have both been increasing True Answer Correct Imports and exports have both been decreasing Incorrect Imports have been increasing and exports have been decreasing Incorrect Imports have been decreasing and exports have been increasing Incorrect Goods and services purchased from abroad are goods and services sold abroad are imports exports True Answer Correct tariffs import quotas Incorrect exports imports Incorrect import quotas tariffs Incorrect France and England both produce wine and clothing under conditions of constant opportunity costs France will have a comparative advantage in wine production if it can produce more wine than England Incorrect its labor productivity in wine production is greater than England s Incorrect the absolute cost of producing wine is lower in France than in indicating that the England Incorrect the opportunity cost of wine production is lower in France than in England True Answer Correct In a single year the Netherlands can raise 100 tons of beef or produce 1 000 boxes of tulips In the same growing season Belgium can raise 50 tons of beef or produce 750 boxes of tulips From this information we know that the Netherlands has a comparative advantage in raising beef True Answer Correct the Netherlands has a comparative advantage in raising tulips Incorrect Belgium has a comparative advantage in raising beef Incorrect Belgium has an absolute advantage in raising beef Incorrect In a Ricardian model of international trade the production possibility frontiers are opportunity cost of increasing the production of one item relative to another convex is constant Incorrect concave increases Incorrect straight lines is constant True Answer Correct straight lines decreases Incorrect France and England both produce wine and cloth under conditions of constant opportunity costs France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine England can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine Using this information we can conclude that France has a comparative advantage in cloth production Incorrect England has a comparative advantage in cloth production True Answer Correct France has a comparative advantage in both goods Incorrect mutually beneficial international trade is not possible Incorrect In a single year the Netherlands can raise 100 tons of beef or produce 1 000 boxes of tulips In the same growing season Belgium can raise 50 tons of beef or produce 750 boxes of tulips In autarky the price of beef 6 7 8 9 11 Production possibility frontiers is higher in the Netherlands than in Belgium Incorrect is lower in the Netherlands than in Belgium True Answer Correct is the same in the Netherlands as in Belgium Incorrect cannot be determined in either country Incorrect In a single year the Netherlands can raise 100 tons of beef or produce 1 000 boxes of tulips In the same growing season Belgium can raise 50 tons of beef or produce 750 boxes of tulips In autarky the price of one ton of beef in the Netherlands is 100 tons of beef Incorrect 1 000 boxes of tulips Incorrect 10 boxes of tulips True Answer Correct 0 1 box of tulips Incorrect illustrate the production choices available to an economy True Answer Correct assume full employment but not maximum efficiency Incorrect assume maximum efficiency but not full employment Incorrect are used to illustrate the law of decreasing opportunity costs Incorrect The absolute value of the slope of the production possibility frontier at any point gives the price of the good on the vertical axis that must be given up to attain an additional unit of the good on the horizontal axis Incorrect is found by dividing the horizontal change by a vertical change Incorrect gives on the vertical axis the quantity of the good that must be given up to produce an additional unit of the good on the horizontal axis True Answer Correct gives on the horizontal axis the price of the good relative to the price of the good on the vertical axis Incorrect At the point at which it is currently producing Britain must give up the production of 75 hats to produce 25 additional sweaters The opportunity cost of producing 3 hats is sweaters 10 12 13 14 15 16 1 True Answer Correct 3 Incorrect 22 Incorrect 28 Incorrect At the point at which it is currently producing Britain must give up the production of 75 hats to produce 25 additional sweaters The opportunity cost of producing 4 sweaters is hats 4 Incorrect 12 True Answer Correct 71 Incorrect 79 Incorrect At the point at which it is currently producing the United States must give up the production of 500 bicycles to produce 20 additional tractors The opportunity cost of producing 100 bicycles is tractor s 1 Incorrect 4 True Answer Correct 25 Incorrect 100 Incorrect At the point at which it is currently producing the United States must give up the production of 500 bicycles to produce 20 additional tractors The opportunity cost of producing 5 tractors is bicycles 5 Incorrect 20 Incorrect 100 Incorrect 125 True Answer Correct 17 On a production possibility frontier opportunity cost is the decrease in the output of one good when the output of the other good is increased True Answer Correct the rate at which people are willing to exchange goods as determined by demand and supply Incorrect the dollar cost of the good given up to get another good Incorrect independent of the slope of the curve Incorrect 18 19 20 Reference Ref 8 1 Table The Production Possibilities for Cars and Leather Boots Look at the table The Production Possibilities for Cars and Leather Boots Given the opportunity costs of production there is no basis for trade True Answer Correct Canada should specialize in boots Incorrect the United States should specialize in cars Incorrect the United States
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