Exam I Practice Questions

Exam I Practice Questions - Exam I Practice Questions...

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C B A Guns Butter D 5 10 15 Beans (Millions of Pounds) Rice (Millions of Pounds) Smithland 5 10 150 20 20 0 Ricardoville X US France "Wine" (Bottles) "Cheese" (Pounds) Exam I Practice Questions – Comparative Advantage and Trade To reveal the “key” click on Tools, Options, View tab, Hidden Text, OK 1. Given the production possibilities frontier shown here we can conclude that the opportunity cost in production of Butter is greatest at basket: a) A b) B c) C d) D 2. This economy is experiencing unemployment, or is using its resources inefficiently at basket: a) A b) B c) C d) D 3. The opportunity cost in production of Guns for this society is smallest at basket: a) A b) B c) C d) D 4. The existence of scarcity confronting this society is best represented by basket: a) A b) B c) C d) D Italy and Germany produce two goods: Wine and Cheese. The hours of labor required to produce these goods are given in the table below: Wine (Hours/Bottle) Cheese (Hours/Pound Italy 10 6 Germany 8 4 5. In the production of Cheese, Germany has: a) an absolute advantage. c) both an absolute and a comparative advantage. b) a comparative advantage. d) neither an absolute nor a comparative advantage. 6. In the production of Wine, Italy has: a) an absolute advantage. c) both an absolute and a comparative advantage. b) a comparative advantage. d) neither an absolute nor a comparative advantage. 7. We would expect opposition to a free trade agreement between Italy and Germany to come from: a) producers of wine in Italy c) producers of wine in Germany b) consumers of wine in Italy d) consumers of wine in Germany 8. We would expect the terms of trade to lie between __ and __ bottles of wine per pound of cheese. a) 5/3; 2 b) 1/2; 3/5 c) 3/5; 2 d) 1/2; 5/3
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The production possibilities frontiers for Ricardoville and Smithland – both countries produce Beans and Rice – are shown in the graph below: 9. Consider a basket which consists of 12 million pounds of rice and 9 million pounds of beans. Smithland and Ricardoville:
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Exam I Practice Questions - Exam I Practice Questions...

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