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Gains from trade


A) occur when one party to the trade has an absolute advantage in both goods.
B) result in being able to consume beyond the trading individuals' production possibilities frontiers.
C) occur when people do not specialize.
D) occur when opportunity costs are equal.
E) always benefit one party but not the other party of any trade.

F) A) and B)
G) C) and D)

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In a production possibilities frontier graph,the cost of producing more units of a good is measured by the


A) dollar value of the resources used to produce the good.
B) amount of the other good or service that must be forgone.
C) dollar value of the additional output.
D) area in the arc between the PPF and a straight line drawn between the starting point and the ending point.
E) None of the above answers is correct.

F) B) and E)
G) A) and B)

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Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?


A) a decrease in idle capital
B) a decrease in unemployment
C) a technological advance in only one sector of the economy
D) a general technological advance that affects all sectors of the economy
E) none of the above

F) C) and D)
G) B) and E)

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-The figure above shows the production possibilities frontier for a country.How does the opportunity cost of compact cars forgone per SUV gained moving from point C to point B compare with the movement from point B to point A? A) The opportunity cost of moving from point C to point B is greater than the movement from point B to point A. B) The opportunity cost of moving from point C to point B is the same as the movement from point B to point A. C) The opportunity cost of moving from point C to point B is less than the movement from point B to point A. D) The opportunity costs cannot be compared because the units of moving from point C to point B differ from the units of moving from point B to point A. E) More information is needed to determine how the two opportunity costs compare. -The figure above shows the production possibilities frontier for a country.How does the opportunity cost of compact cars forgone per SUV gained moving from point C to point B compare with the movement from point B to point A?


A) The opportunity cost of moving from point C to point B is greater than the movement from point B to point A.
B) The opportunity cost of moving from point C to point B is the same as the movement from point B to point A.
C) The opportunity cost of moving from point C to point B is less than the movement from point B to point A.
D) The opportunity costs cannot be compared because the units of moving from point C to point B differ from the units of moving from point B to point A.
E) More information is needed to determine how the two opportunity costs compare.

F) C) and D)
G) A) and B)

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To calculate the opportunity cost per unit,you divide the decrease in the quantity of the forgone item by the


A) decrease in the quantity of the other item.
B) increase in the quantity of the other item obtained.
C) price of the item obtained.
D) price of the item forgone.
E) price of the item obtained and then multiply by the price of the item forgone.

F) A) and D)
G) B) and C)

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-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat for the United Kingdom? A) 1/4 of a pound of fish B) 1/2 of a pound of fish C) 1 pound of fish D) 200 pounds of fish E) 2 pounds of fish -The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat for the United Kingdom?


A) 1/4 of a pound of fish
B) 1/2 of a pound of fish
C) 1 pound of fish
D) 200 pounds of fish
E) 2 pounds of fish

F) A) and C)
G) C) and E)

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-In the above figure,Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water. A) 1 gallon B) 1/2 of a gallon C) 6 gallons D) 1/4 of a gallon E) 2 gallons -In the above figure,Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.


A) 1 gallon
B) 1/2 of a gallon
C) 6 gallons
D) 1/4 of a gallon
E) 2 gallons

F) A) and C)
G) C) and D)

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-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons? A) 6 thousand bottles of wine B) 15 thousand bottles of wine C) 9 thousand bottles of wine D) 6 tons of rice E) Nothing,it is a free lunch. -The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?


A) 6 thousand bottles of wine
B) 15 thousand bottles of wine
C) 9 thousand bottles of wine
D) 6 tons of rice
E) Nothing,it is a free lunch.

F) C) and D)
G) A) and D)

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-Omar and John can fix computers or write computer programs.The table above shows the number of computers they can fix and the lines of code they can write in a day. a.Who,if anyone,has the absolute advantage? b.Who has the comparative advantage in fixing computers? Why? c.Who has the comparative advantage in writing programs? Why? -Omar and John can fix computers or write computer programs.The table above shows the number of computers they can fix and the lines of code they can write in a day. a.Who,if anyone,has the absolute advantage? b.Who has the comparative advantage in fixing computers? Why? c.Who has the comparative advantage in writing programs? Why?

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a.Omar has an absolute advantage in fixi...

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Production efficiency occurs


A) anywhere inside or on the production possibilities frontier.
B) when the total cost of production is minimized.
C) at all points on the production possibilities frontier.
D) at only one point on the production possibilities frontier.
E) at all points inside the production possibilities frontier.

F) B) and E)
G) B) and C)

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Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of ________ reflects ________.


A) 500 books and 1000 tables;an inefficient but attainable point
B) 1000 books and 500 tables;an efficient point
C) 1000 books and 1000 tables;a free lunch
D) 500 books and 500 tables;an attainable and efficient point
E) 1000 books and 1500 tables;a free lunch

F) A) and B)
G) C) and D)

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If Toni has an absolute advantage in both sewing and ironing when compared to Tom,then


A) they might benefit from trading,but we need more information to determine in which task they should specialize.
B) neither Toni nor Tom can benefit from trading with each other.
C) Toni should specialize in sewing,and Tom should specialize in ironing.
D) Toni cannot benefit from trading with Tom,but Tom can benefit from trading with Toni.
E) Tom cannot benefit from trading with Toni,but Toni can benefit from trading with Tom.

F) A) and E)
G) A) and D)

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-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will produce ________ and France will produce ________. A) wheat;wheat B) wheat;fish C) fish;wheat D) fish;fish E) both wheat and fish;both wheat and fish -The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will produce ________ and France will produce ________.


A) wheat;wheat
B) wheat;fish
C) fish;wheat
D) fish;fish
E) both wheat and fish;both wheat and fish

F) B) and D)
G) All of the above

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"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

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The statement is incorrect.Absolute adva...

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Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its ________ axis,this country ________.


A) vertical;will experience greater economic growth
B) vertical;will not face opportunity costs
C) horizontal;will have a larger chance at economic growth
D) horizontal;faces larger trade offs
E) vertical;is operating at an inefficient point

F) None of the above
G) B) and E)

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Why do nations engage in international trade?

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Nations engage in international trade be...

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The United States has an absolute advantage in producing sugar over all of the other sugar producing countries.Does this fact mean that we should not import any sugar from the other countries?

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Having an absolute advantage doesn't mea...

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The opportunity cost of economic growth is


A) 0,because it means an expansion of production possibilities.
B) the decrease in the current production of productive factors.
C) a slower accumulation of human capital.
D) the decrease in the current production of consumption goods.
E) the increase in the nation's capital stock and/or its technology.

F) C) and D)
G) A) and B)

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Other things equal,if Mexico devotes more resources to train its population than Spain,


A) Mexico will be able to eliminate opportunity cost faster than Spain.
B) Mexico will be able to eliminate scarcity faster than Spain.
C) Spain will grow faster than Mexico.
D) Mexico will have more current consumption than Spain.
E) Mexico will grow faster than Spain.

F) A) and D)
G) None of the above

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-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda. A) 2 gallons B) 1/2 of a gallon C) 4 gallons D) 1 gallon E) 1/4 of a gallon -In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.


A) 2 gallons
B) 1/2 of a gallon
C) 4 gallons
D) 1 gallon
E) 1/4 of a gallon

F) A) and D)
G) A) and C)

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