Exam+review+DV+chap+2

Exam+review+DV+chap+2 - Review questions True/False...

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Review questions True/False Indicate whether the sentence or statement is true or false. ____ 1. The highest valued, next best alternative that must be forgone to obtain an item is the item’s opportunity cost. ____ 2. The opportunity cost of producing more of a particular good normally increases as more of that good is pro- duced. ____ 3. If there are only two goods and if the opportunity cost of producing an additional good is the same no matter how many goods are produced, the production possibilities curve would have to be a straight line. ____ 4. Absolute advantage is a nation’s ability to produce a good or service at either lower cost, or to produce more output from a given amount of inputs than another country. ____ 5. In Country A the opportunity cost of 100 gallons of milk is 150 pounds of beef. In Country B the opportunity cost of 100 pounds of beef is 70 gallons of milk. Country A has a comparative advantage in beef production. ____ 6. Absolute advantage in different goods and services in different countries suggests that specialization and in- ternational trade can maximize total global output. ____ 7. With international trade, the domestic economy’s consumption possibilities curve can be greater than the do- mestic economy’s production possibilities curve. ____ 8. Currently citizens of a country are producing 200 baskets of food and 75 engines per week. If the citizens wish to increase food production by 100 baskets they could only produce 25 engines per week. The average
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Exam+review+DV+chap+2 - Review questions True/False...

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