21.IfShawncanproducedonutsataloweropportunitycostthanSue,then
a.Shawnhasacomparativeadvantageintheproductionofdonuts.
b.Suehasacomparativeadvantageintheproductionofdonuts.
c.Shawnshouldnotproducedonuts.
d.ShawniscapableofproducingmoredonutsthanSueinagivenamountoftime.
22.IfIowa’sopportunitycostofcornislowerthanOklahoma’sopportunitycostofcorn,then
a.Iowahasacomparativeadvantageintheproductionofcorn.
b.Iowahasanabsoluteadvantageintheproductionofcorn.
c.IowashouldimportcornfromOklahoma.
d.Oklahomashouldproducejustenoughcorntosatisfyitsownresidents’demands.
23.CanadaandtheU.S.bothproducewheatandcomputersoftware.Canadaissaidtohavethecomparativeadvantageinproducingwheatif
a.CanadarequiresfewerresourcesthantheU.S.toproduceabushelofwheat.
b.theopportunitycostofproducingabushelofwheatislowerforCanadathanitisfortheU.S.
c.theopportunitycostofproducingabushelofwheatislowerfortheU.S.thanitisforCanada.
d.theU.S.hasanabsoluteadvantageoverCanadainproducingcomputersoftware.
24.BothDaveandCarolineproducesweatersandsocks.IfDave’sopportunitycostof1sweateris3socksandCaroline’sopportunitycostof1sweateris5socks,then
a.Davehasacomparativeadvantageintheproductionofsweaters.
b.Carolinehasacomparativeadvantageintheproductionofsweaters.
c.Davehasacomparativeadvantageintheproductionofsocks.
d.Davehasacomparativeadvantageintheproductionofbothsweatersandsocks.
25.Comparativeadvantageisrelatedmostcloselytowhichofthefollowing?
a.outputperhour
b.opportunitycost
c.efficiency
d.bargainingstrengthininternationaltrade
26.Whendescribingtheopportunitycostoftwoproducers,economistsusetheterm
a.naturaladvantage.
b.tradingadvantage.
c.comparativeadvantage.
d.absoluteadvantage.
27.Fortwoindividualswhoengageinthesametwoproductiveactivities,itisimpossibleforoneofthetwoindividualsto
a.haveacomparativeadvantageinbothactivities.
b.haveanabsoluteadvantageinbothactivities.
c.bemoreproductiveperunitoftimeinbothactivities.
d.gainfromtradewitheachother.
28.Twoindividualsengageinthesametwoproductiveactivities.Inwhichofthefollowingcircumstanceswouldneitherindividualhaveacomparativeadvantageineitheractivity?
a.Oneindividual’sproductionpossibilitiesfrontierissteeperthantheotherindividual’sproductionpossibilitiesfrontier.
b.Oneindividualisfasteratbothactivitiesthantheotherindividual.
c.Oneindividual’sopportunitycostsarethesameastheotherindividual’sopportunitycosts.
d.Noneoftheaboveiscorrect;oneofthetwoindividualsalwayswillhaveacomparativeadvantageinatleastoneofthetwoactivities.
29.Whichofthefollowingstatementsaboutcomparativeadvantageisnottrue?
a.Comparativeadvantageisdeterminedbywhichpersonorgroupofpersonscanproduceagivenquantityofagoodusingthefewestresources.
b.Theprincipleofcomparativeadvantageappliestocountriesaswellastoindividuals.
c.Economistsusetheprincipleofcomparativeadvantagetoemphasizethepotentialbenefitsoffreetrade.
d.Acountrymayhaveacomparativeadvantageinproducingagood,eventhoughitlacksanabsoluteadvantageinproducingthatgood.
30.Theprincipleofcomparativeadvantagedoesnotprovideanswerstocertainquestions.Oneofthosequestionsis
a.Dospecializationandtradebenefitmorethanonepartytoatrade?
b.Isitabsoluteadvantageorcomparativeadvantagethatreallymatters?
c.Howarethegainsfromtradesharedamongthepartiestoatrade?
d.Isitpossibleforspecializationandtradetoincreasetotaloutputoftradedgoods?
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