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Unformatted text preview: Z Butt er Guns W X Y Butt er Guns The table below shows the number of hours French and English workers must work in order to produce 1 bottle of wine and 1 pound of cheese. Wine (Hours/Bottle) Cheese (Hours/Poun d) France 2 3 England 4 5 1. England has an absolute advantage in production of: a) wine, but not cheese. c) both wine and cheese. b) cheese, but not wine. * d) neither wine nor cheese. 2. England has comparative advantage in production of: a) wine, but not cheese. c) both wine and cheese. * b) cheese, but not wine. d) neither wine nor cheese. 3. When trade opens between England and France we would expect the terms of trade to lie between _____ and ______ bottles of wine per pound of cheese. a) 2/3; 4/5 b) 1/2; 3/5 c) 5/3; 2 * d) 3/2; 5/4 4. We would expect opposition to free trade between England and France to come from a) French wine producers c) French and English consumers * b) French cheese producers d) All of the above. 5. A bicycle was produced, but not sold, by a firm in 2007. The bicycle was then sold by the firm to a college student in 2008. These two transactions a) increased both 2007 and 2008 GDP. b) increased 2007 GDP and decreased 2008 GDP. * c) increased 2007 GDP, but did not affect 2008 GDP. d) did not affect 2007 GDP, but increased 2008 GDP. 6. Brittany purchases a laptop produced in Japan. This transaction * a) increases Consumption but does not change GDP in the United States. b) increases Consumption and GDP in the United States....
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This note was uploaded on 08/02/2011 for the course ECON 252 taught by Professor Robertholand during the Spring '08 term at Purdue University-West Lafayette.
- Spring '08