Micro-Economics Ch 8 Questions

Micro-Economics Ch 8 Questions - Name: _ Date: _ 1. France...

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Page 1 Name: __________________________ Date: _____________ 1. France and England both produce wine and cloth under conditions of constant opportunity costs. France will have a comparative advantage in wine production if: A) it can produce more wine than England. B) its labor productivity in wine production is greater than England's. C) the absolute cost of producing wine is lower in France than in England. D) the opportunity cost of wine production is lower in France than in England. 2. Bangladesh exports shirts, the making of which is labor-intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is: A) a hotter climate, which makes it possible to produce shirts outdoors, eliminating the need for factory buildings and hence reducing costs. B) superior production technology. C) that, in comparison with the United States, Bangladesh is a labor-abundant country. D) the higher labor productivity in Bangladesh. 3. When an economy moves from autarky to free international trade, in the export sector: A) consumer and producer surplus both rise and the economy as a whole gains. B) consumer surplus rises, producer surplus falls, and the economy as a whole gains. C) consumer surplus falls, producer surplus rises, and the economy as a whole gains. D) the decrease in either consumer surplus or producer surplus is sufficiently large to cause net losses for the economy. 4. Taken collectively, people in nations that engage in international trade are not likely to: A) consume more than they were able to consume in the absence of trade. B) raise their standards of living. C) gain from lower opportunity costs of production. D) be made worse off. 5. If the ________ differ(s) between two countries, this suggests the possibility for mutually advantageous trade. A) currency B) factor endowments C) exchange rate D) level of government spending for defense 6. Chile has a comparative advantage in copper. Which of the following is a source of this comparative advantage? A) mild temperatures B) large deposits of copper ore C) no opportunity cost associated with copper production D) high tariffs on copper from other nations
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Page 2 7. Mexico is relatively labor-abundant when compared with the United States. Therefore, Mexico has a comparative advantage in ________ compared with the United States. A) all goods
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This note was uploaded on 12/02/2011 for the course ECONOMICS 202 taught by Professor Black during the Fall '08 term at Boise State.

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Micro-Economics Ch 8 Questions - Name: _ Date: _ 1. France...

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