Ch 5 ques&ans - Chapter 3Interdependence and the Gains from Trade MULTIPLE CHOICE 1 What is the best reason for people to provide you with goods and

Ch 5 ques&ans - Chapter 3Interdependence and the Gains...

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Unformatted text preview: Chapter 3—Interdependence and the Gains from Trade MULTIPLE CHOICE 1. What is the best reason for people to provide you with goods and services? a. They are acting out of generosity. b. They are acting because they like you. c. They do so because they get something in return. d. They are required to do so by government. ANS: C PTS: 1 DIF: Easy REF: p.51 BLM: Remember NOT: Macro TB_3-1 2. A rancher can produce only hamburgers, while a farmer can produce only French fries. If the rancher and the farmer like both foods, which of the following is most likely? a. They cannot gain from trade. b. They could gain from trade under certain circumstances, but not always. c. They could gain from trade because each would enjoy a greater variety of food. d. They could gain from trade only if each were indifferent between hamburgers and French fries. ANS: C PTS: 1 DIF: Average REF: p.52 BLM: Higher Order NOT: Macro TB_3-2 3. Regan grows flowers and makes vases. Jayson also grows flowers and makes vases, but Regan is better at producing both. In this case, who could benefit from trade? a. Both Jayson and Regan. b. Jayson, but not Regan. c. Regan, but not Jayson. d. Neither Jayson nor Regan. ANS: A PTS: 1 DIF: Average REF: p.52 BLM: Higher Order NOT: Macro TB_3-3 4. If there is no trade, which of the following is most likely? a. A country is better off because it will become self-sufficient. b. A country's production possibilities frontier is also its consumption possibilities frontier. c. A country can still benefit from international specialization. d. More product variety is available in a country. ANS: B PTS: 1 DIF: Average REF: p.52 BLM: Remember NOT: Macro TB_3-4 5. If there is trade, which of the following is most likely? a. A country is worse off because it becomes dependent on other countries. b. A country will produce a greater variety of goods and services to trade. c. A country's consumption possibilities frontier can be outside its production possibilities frontier. d. A country will experience a lower unemployment rate. ANS: C PTS: 1 DIF: Average REF: p.52 BLM: Remember NOT: Macro TB_3-5 6. When can a country's consumption possibilities frontier be outside its production possibilities frontier? a. If additional resources become available. b. If there is an increase in the level of technology. c. If the country engages in trade. d. If resources are shiftable. ANS: C PTS: 1 DIF: Challenging REF: p.55 BLM: Remember NOT: Macro TB_3-6 7. When will a production possibilities frontier be linear and not bowed out? a. If no tradeoffs exist. b. If the tradeoff between the two goods is always at a constant rate. c. If unemployment is zero. d. If resources are allocated efficiently. ANS: B PTS: 1 DIF: Average REF: p.54 BLM: Remember NOT: Macro TB_3-7 8. What is the difference between production possibilities frontiers that are bowed out and those that are linear? a. Bowed out production possibilities frontiers illustrate tradeoffs where linear production possibilities frontiers do not. b. Bowed out production possibilities frontiers show increasing opportunity cost where linear ones show constant opportunity cost. c. Bowed out production possibilities frontiers are the result of perfectly shiftable resources where linear production possibilities frontiers are not. d. Linear production possibilities frontiers illustrate real world conditions more than bowed out production possibilities frontiers. ANS: B PTS: 1 DIF: Challenging REF: p.54 BLM: Remember NOT: Macro TB_3-8 9. Which of the following is NOT correct? a. Trade allows for specialization. b. Trade is good for nations. c. Trade is based on absolute advantage. d. Trade allows individuals to consume outside of their individual production possibilities curve. ANS: C PTS: 1 DIF: Average REF: p.54-56 BLM: Higher Order NOT: Macro TB_3-9 10. If labour in Mexico is less productive than labour in the United States in all areas of production, which of the following is correct? a. Neither nation can benefit from trade. b. Mexico can benefit from trade but the United States cannot. c. Mexico will not have a comparative advantage in any good. d. Both nations can benefit from trade. ANS: D PTS: 1 DIF: Average REF: p.54-56 BLM: Remember NOT: Macro TB_3-10 Table 3-1 Labour Hours Needed to Make 1 Kg of: Kilograms produced in 40 hours: Meat Potatoes Meat Potatoes Farmer 8 2 5 20 Rancher 4 5 10 8 11. Refer to Table 3-1. What is the opportunity cost of 1 pound of meat for the Farmer? a. 1/4 hour of labour. b. 4 hours of labour. c. 4 kg of potatoes. d. 1/4 kg of potatoes. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-11 12. Refer to Table 3-1. What is the opportunity cost of 1 kg of meat for the Rancher? a. 4 hours of labour. b. 5 hours of labour. c. 5/4 kg of potatoes. d. 4/5 kg of potatoes. ANS: D PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-12 13. Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the Farmer? a. 8 hours of labour. b. 2 hours of labour. c. 4 kg of meat. d. 1/4 kg of meat. ANS: D PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-13 14. Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the Rancher? a. 4 hours of labour. b. 5 hours of labour. c. 5/4 kg of meat. d. 4/5 kg of meat. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-14 15. Refer to Table 3-1. Which of the following is correct? a. The Farmer has an absolute advantage in meat, and the Rancher has an absolute advantage in potatoes. b. The Farmer has an absolute advantage in potatoes, and the Rancher has an absolute advantage in meat. c. The Farmer has an absolute advantage in meat, and the Rancher has an absolute advantage in meat. d. The Farmer has an absolute advantage in neither good, and the Rancher has an absolute advantage in both goods. ANS: B PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-15 16. Refer to Table 3-1. Which of the following is correct? a. The Rancher has an absolute advantage in both goods, and the Rancher has a comparative advantage in meat. b. The Rancher has an absolute advantage in meat, and the Rancher has a comparative advantage in potatoes. c. The Rancher has an absolute advantage in meat, and the Rancher has a comparative advantage in neither good. d. The Rancher has an absolute advantage in both goods, and the Rancher has a comparative advantage in potatoes. ANS: B PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-16 17. Refer to Table 3-1. Which of the following is correct? a. The Farmer has an absolute advantage in potatoes, and the Rancher has a comparative advantage in meat. b. The Farmer has an absolute advantage in meat, and the Rancher has a comparative advantage in potatoes. c. The Farmer has an absolute advantage in neither good, and the Rancher has a comparative advantage in potatoes. d. The Farmer has an absolute advantage in neither good, and the Rancher has a comparative advantage in meat. ANS: A PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-17 18. Refer to Table 3-1. Which of the following is correct? a. The Rancher has a comparative advantage in neither good, and the Farmer has a comparative advantage in both goods. b. The Rancher has a comparative advantage in both goods, and the Farmer has a comparative advantage in neither good. c. The Rancher has a comparative advantage in meat, and the Farmer has a comparative advantage in potatoes. d. The Rancher has a comparative advantage in potatoes, and the Farmer has a comparative advantage in meat. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-18 19. Refer to Table 3-1. How could the Farmer and Rancher both benefit? a. By the Farmer specializing in meat and the Rancher specializing in potatoes. b. By the Farmer specializing in potatoes and the Rancher specializing in meat. c. By the Farmer specializing in neither good and the Rancher specializing in both goods. d. They cannot benefit by specialization and trade. ANS: B PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-19 Table 3-2 Labour Hours Needed to Make 1 kilogram of: Kilograms Produced in 40 Hours: Meat Potatoes Meat Potatoes Farmer 4 1 10 40 Rancher 4 5 10 8 20. Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Farmer? a. 1/4 hour of labour. b. 4 hours of labour. c. 4 kilograms of potatoes. d. 1/4 kilogram of potatoes. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-20 21. Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the Rancher? a. 4 hours of labour. b. 5 hours of labour. c. 5/4 kilograms of potatoes. d. 4/5 kilogram of potatoes. ANS: D PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-21 22. Refer to Table 3-2. What is the opportunity cost of 1 kilogram of potatoes for the Farmer? a. 8 hours of labour. b. 2 hours of labour. c. 4 kilograms of meat. d. 1/4 kilogram of meat. ANS: D PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-22 23. Refer to Table 3-2. What is the opportunity cost of 1 kilogram of potatoes for the Rancher? a. 4 hours of labour. b. 5 hours of labour. c. 5/4 pounds of meat. d. 4/5 pound of meat. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-23 24. Refer to Table 3-62. Which of the following is correct? a. The Farmer has an absolute advantage in meat, and the Rancher has an absolute advantage in potatoes. b. The Farmer has an absolute advantage in potatoes, and the Rancher has an absolute advantage in meat. c. The Farmer has an absolute advantage in neither good, and the Rancher has an absolute advantage in both goods. d. The Farmer has an absolute advantage in potatoes, and the Rancher has an absolute advantage in neither good. ANS: D PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-24 25. Refer to Table 3-2. Which of the following is correct? a. The Rancher has an absolute advantage in both goods, and the Farmer has a comparative advantage in meat. b. The Rancher has an absolute advantage in meat, and the Farmer has a comparative advantage in potatoes. c. The Rancher has an absolute advantage in meat, and the Farmer has a comparative advantage in neither good. d. The Rancher has an absolute advantage in neither good, and the Farmer has a comparative advantage in potatoes. ANS: D PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-25 26. Refer to Table 3-2. Which of the following is correct? a. The Farmer has an absolute advantage in neither good, and the Rancher has a comparative advantage in meat. b. The Farmer has an absolute advantage in meat, and the Rancher has a comparative advantage in potatoes. c. The Farmer has an absolute advantage in potatoes, and the Rancher has a comparative advantage in meat. d. The Farmer has an absolute advantage in neither good, and the Rancher has a comparative advantage in potatoes. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-26 27. Refer to Table 3-2. Which of the following is correct? a. The Rancher has a comparative advantage in neither good, and the Farmer has a comparative advantage in both goods. b. The Rancher has a comparative advantage in both goods, and the Farmer has a comparative advantage in neither good. c. The Rancher has a comparative advantage in meat, and the Farmer has a comparative advantage in potatoes. d. The Rancher has a comparative advantage in potatoes, and the Farmer has a comparative advantage in meat. ANS: C PTS: 1 DIF: Challenging REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-27 28. Refer to Table 3-2. How could the Farmer and Rancher both benefit? a. By the Farmer specializing in meat and the Rancher specializing in potatoes. b. By the Farmer specializing in potatoes and the Rancher specializing in meat. c. By the Farmer specializing in neither good and the Rancher specializing in both goods. d. They cannot benefit by specialization and trade. ANS: B PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-28 Figure 3-1 29. Refer to Figure 3-1. If Paul divides his time equally between corn and wheat, what will he be able to produce? a. 2 bushels of wheat and 2 bushels of corn. b. 3 bushels of wheat and 3 bushels of corn. c. 4 bushels of wheat and 5 bushels of corn. d. 4 bushels of wheat and 6 bushels of corn. ANS: C PTS: 1 DIF: Average REF: p.53 BLM: Higher Order NOT: Macro TB_3-9 30. Refer to Figure 3-1. What is the opportunity cost of 1 bushel of wheat for Cliff? a. 1/3 bushel of corn. b. 2/3 bushel of corn. c. 1 bushel of corn. d. 3/2 bushels of corn. ANS: B PTS: 1 DIF: Average REF: p.53 BLM: Higher Order NOT: Macro TB_3-30 31. Refer to Figure 3-1. Assume that both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they were the only producers of corn and wheat, what would the total production of wheat and corn be? a. 8 bushels of wheat and 7 bushels of corn. b. 7 bushels of wheat and 6 bushels of corn. c. 6 bushels of wheat and 8 bushels of corn. d. 7 bushels of wheat and 7 bushels of corn. ANS: D PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-31 32. Refer to Figure 3-1. Assume that Cliff and Paul were both producing wheat and corn, and each was dividing their time equally between the two. Then they decide to specialize in the product they have a comparative advantage in. What would happen to the total production of corn? a. Increase by 1 bushel. b. Increase by 3 bushels. c. Increase by 5 bushels. d. Decrease by 2 bushels. ANS: B PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-32 33. Refer to Figure 3-1. Assume that Cliff and Paul were both producing wheat and corn, and each was dividing their time equally between the two. Then they decide to specialize in the product they have a comparative advantage in and trade 3 bushels of wheat for 3 bushels of corn. What would Cliff now be able to consume? a. 4 bushels of wheat and 3 bushels of corn. b. 3 bushels of wheat and 4 bushels of corn. c. 3 bushels of wheat and 3 bushels of corn. d. 2 bushels of wheat and 3 bushels of corn. ANS: C PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-33 34. Refer to Figure 3-1. Which of the following is true for Cliff and Paul? a. Paul has an absolute advantage in both wheat and corn. b. Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn. c. Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn. d. Cliff has an absolute advantage in both wheat and corn. ANS: A PTS: 1 DIF: Average REF: p.53 BLM: Higher Order NOT: Macro TB_3-34 35. Refer to Figure 3-1. Which of the following is true for Cliff and Paul? a. Paul has a comparative advantage in both wheat and corn. b. Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn. c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn. d. Cliff has a comparative advantage in both wheat and corn. ANS: C PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-35 Figure 3-2 36. Refer to Figure 3-2. If Paul divides his time equally between corn and wheat, what will he be able to produce? a. 4 bushels of wheat and 1 bushel of corn. b. 4 bushels of wheat and 5 bushels of corn. c. 5 bushels of wheat and 4 bushels of corn. d. 5 bushels of wheat and 5 bushels of corn. ANS: D PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-36 37. Refer to Figure 3-2. What is the opportunity cost of 1 bushel of wheat for Cliff? a. 1/4 bushel of corn. b. 1/2 bushel of corn. c. 1 bushel of corn. d. 4 bushels of corn. ANS: A PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-37 38. Refer to Figure 3-2. Assume that both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they were the only producers of corn and wheat, what would the total production of wheat and corn be? a. 7 bushels of wheat and 8 bushels of corn. b. 8 bushels of wheat and 7 bushels of corn. c. 9 bushels of wheat and 6 bushels of corn. d. 18 bushels of wheat and 12 bushels of corn. ANS: D PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-38 39. Refer to Figure 3-2. Assume that Cliff and Paul were both producing wheat and corn, and both were dividing their time equally between the two. Then they decide to specialize in the product for which they have a comparative advantage. What would happen to the production of corn? a. Increase by 1 bushel. b. Increase by 2 bushels. c. Increase by 3 bushels. d. Increase by 4 bushels. ANS: D PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-39 40. Refer to Figure 3-2. Assume that Cliff and Paul were both producing wheat and corn, and both were dividing their time equally between the two. Then they decide to specialize in the product for which they have a comparative advantage and trade 3 bushels of wheat for 3 bushels of corn. What would Cliff now be able to consume? a. 5 bushels of wheat and 3 bushels of corn. b. 4 bushels of wheat and 3 bushels of corn. c. 3 bushels of wheat and 5 bushels of corn. d. 3 bushels of wheat and 3 bushels of corn. ANS: A PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-40 41. Refer to Figure 3-2. Which of the following is true for Cliff and Paul? a. Paul has an absolute advantage in both wheat and corn. b. Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn. c. Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn. d. Cliff has an absolute advantage in both wheat and corn. ANS: A PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-41 42. Refer to Figure 3-2. Which of the following is true for Cliff and Paul? a. Paul has a comparative advantage in both wheat and corn. b. Paul has an absolute advantage in wheat and Cliff has a comparative advantage in corn. c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn. d. Cliff has a comparative advantage in both wheat and corn. ANS: C PTS: 1 DIF: Average REF: p.57-59 BLM: Higher Order NOT: Macro TB_3-42 Figure 3-3 Ice cream is measured in kilograms. 43. Refer to Figure 3-3. For Ben, what is the opportunity cost of 1 kg of ice cream? a. 1/4 kg of cones. b. 1/2 kg of cones. c. 2 kg of cones. d. 4 kg of cones. ANS: D PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-43 44. Refer to Figure 3-3. For Jerry, what is the opportunity cost of 1 pound of ice cream? a. 3/2 kg of cones. b. 1/3 kg of cones. c. 1 kg of cones. d. 2 kg of cones. ANS: A PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-44 45. Refer to Figure 3-3. For Ben, what is the opportunity cost of 1 kg of cones? a. 2 kg of ice cream. b. 1/2 kg of ice cream. c. 4 kg of ice cream. d. 1/4 kg of ice cream. ANS: D PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-45 46. Refer to Figure 3-3. For Jerry, what is the opportunity cost of 1 kg of cones? a. 2/3 kg of ice cream. b. 3 kg of ice cream. c. 1 kg of ice cream. d. 2 kg of ice cream. ANS: A PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-46 47. Refer to Figure 3-3. Which of the following is correct? a. Ben has a comparative advantage in cones and Jerry has a comparative advantage in ice cream. b. Ben has a comparative advantage in ice cream and Jerry has a comparative advantage in cones. c. Ben has a comparative advantage in neither good and Jerry has a comparative advantage in both goods. d. Ben has a comparative advantage in both goods and Jerry has a comparative advantage in neither good. ANS: A PTS: 1 DIF: Challenging REF: p.53 BLM: Higher Order NOT: Macro TB_3-47 48. Refer to Figure 3-3. Which of the following is correct? a. Ben has an ...
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