Chpt_3 Gains from Trade

Chpt_3 Gains from Trade - Chpt 3 Gains from Trade...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chpt 3 Gains from Trade True/False Indicate whether the statement is true or false. ____ 1. A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce. ____ 2. Production possibilities frontiers cannot be used to illustrate tradeoffs. ____ 3. Trade allows a country to consume outside its production possibilities frontier. ____ 4. For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two op- portunity costs. ____ 5. Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 6. When can two countries gain from trading two goods? a. when the first country can only produce the first good and the second country can only produce the second good b. when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost c. when the first country is better at producing both goods and the second country is worse at producing both goods d. Two countries could gain from trading two goods under all of the above conditions. ____ 7. A production possibilities frontier is bowed outward when a. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. b. an economy is self-sufficient instead of interdependent and engaged in trade. c. the rate of tradeoff between the two goods being produced is constant. d. the rate of tradeoff between the two goods being produced depends on how much of each good is being produced. ____ 8. Assume for Namibia that the opportunity cost of each hut is 200 bowls. Then which of these pairs of points could be on Namibia's production possibilities frontier? a. (200 huts, 30,000 bowls) and (150 huts, 35,000 bowls) b. (200 huts, 40,000 bowls) and (150 huts, 30,000 bowls) c. (300 huts, 50,000 bowl) and (200 huts, 60,000 bowls) d. (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls) ____ 9. Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is a. 0.36 bushel of corn. b. 2.8 bushels of corn.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
c. 14 bushels of corn. d. 70 bushels of corn. ____ 10. The principle of comparative advantage does not provide answers to certain questions. One of those ques- tions is a. Do specialization and trade benefit more than one party to a trade? b. Is it absolute advantage or comparative advantage that really matters? c. How are the gains from trade shared among the parties to a trade? d. Is it possible for specialization and trade to increase total output of traded goods?
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/18/2012 for the course ITEC 3290 taught by Professor Dunn during the Spring '12 term at East Carolina University .

Page1 / 16

Chpt_3 Gains from Trade - Chpt 3 Gains from Trade...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online