chapter 8 - Name: _ Date: _ Use the following to answer...

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Name: __________________________ Date: _____________ Use the following to answer question 1: 1. (Table: Production Possibilities for Machinery and Petroleum) The table shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated, assuming constant costs at all levels of production. The opportunity cost in the United States of producing 60 units of petroleum is ________ units of machinery. A) 60 B) 80 C) 100 D) 120 Use the following to answer question 2: Figure: Market for MP3 Players Page 1
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2. (Figure: Market for MP3 Players) In the market for MP3 players, the autarky price equals ________. A) $140 B) $120 C) $110 D) $100 Use the following to answer question 3: 3. (Table: Production Possibilities for the United States and Canada) The table shows the production possibilities for both the United States and Canada. Both nations can produce cars and lumber. If these nations were to trade, which of the following is true? A) Canada has the comparative advantage in cars and should trade cars to the United States in exchange for lumber. B) Canada has the comparative advantage in lumber and should trade lumber to the United States in exchange for cars. C) Canada has the comparative advantage in lumber and should trade cars to the United States in exchange for lumber. D) Canada has the comparative advantage in cars and should trade lumber to the United States in exchange for cars. Page 2
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4. (Table: Production Possibilities for Machinery and Petroleum). Both the United States and Mexico will gain from trade if one unit of machinery trades for ________ of petroleum. A) 2 units B) 4 units C) 6 units D) 8 units 5. If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ________ and the quantity of shoes consumed in the domestic market to ________ . A) fall; fall B) fall; rise C) rise; fall D) rise; rise 6. In a single growing season, the country of Pastoral can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, the country of Bucolic can raise 50 tons of beef or produce 750 boxes of tulips. In autarky, the price of one ton of beef in Pastoral is: A) 100 tons of beef. B)
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chapter 8 - Name: _ Date: _ Use the following to answer...

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