MC Exam - 1 When a country requires fewer resources to produce a product than other countries it is said to have a(n A absolute advantage in the

MC Exam - 1 When a country requires fewer resources to...

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1. When a country requires fewer resources to produce a product than other countries, it is said to have a(n): A) absolute advantage in the production of the product. 2. Ricardo's theory of trade discredited the idea that inflows of gold or silver as a result of exporting helped a nation, whereas the outflows of gold or silver as a result of importing hurt a nation; that was known as: B) mercantilism. 3. According to Ricardo, C) All countries can gain from trade if they export goods in which they have a comparative advantage. 4. According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because: A) The nation's resources are used where they are most productive. 5. What is the marginal product of labor? B) the extra output obtained by using one more unit of labor 6. Production possibilities frontiers in the Ricardian model: A) are linear (i.e., straight lines), with end points showing a country's production when it only produces one or the other good. 7. With the assumption that the marginal product of labor is constant and that labor is the only variable resource, the slope of the PPF is: C) negative and constant. 8. When a nation is in autarky (a no-trade state) and maximizes its living standard, its consumption and production points are: A) along its production possibilities frontier. 9. Assume the MPLt = 5 tennis rackets and MPLb = 4 baseball bats. If the economy has 100 workers, then the economy can produce: A) a maximum of 500 tennis rackets. 10. The slope of the PPF can be expressed as: D) the negative of the ratio of the marginal products of labor in producing each good.

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