Exam I - Spring 2011 - BLUE

Exam I - Spring 2011 - BLUE - The table below shows the...

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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/Pound) 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. c)
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Exam I - Spring 2011 - BLUE - The table below shows the...

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