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 othercountries, it is said to have a(n): A) absolute advantage in the production ofthe product.2. Ricardo's theory of trade discredited the idea that inflows of gold or silveras a result of exporting helped a nation, whereas the outflows of gold or silveras a result of importinghurt a nation; that was known as: B) mercantilism.3. According to Ricardo, C) All countries can gain from trade if they exportgoods in which they have a comparative advantage.4. According to the Ricardian principle of comparative advantage, internationaltrade increases a nation's total output because: A) The nation's resources areused where they are most productive.5. What is the marginal product of labor? B) the extra output obtained by usingone more unit of labor6. Production possibilities frontiers in the Ricardian model: A) are linear(i.e., straight lines), with end points showing a country's production when itonly produces one or the other good.7. With the assumption that the marginal product of labor is constant and thatlabor is the only variable resource, the slope of the PPF is: C) negative andconstant.8. When a nation is in autarky (a no-trade state) and maximizes its livingstandard, its consumption and production points are: A) along its productionpossibilities frontier.9. Assume the MPLt = 5 tennis rackets and MPLb = 4 baseball bats. If the economyhas 100 workers, then the economy can produce: A) a maximum of 500 tennisrackets.10. The slope of the PPF can be expressed as:D) the negative of the ratio ofthe marginal products of labor in producing each good.

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