51) To achieve gains from trade, a country
A) needs to have an absolute advantage in the production of all goods.
B) specializes in the producing a good in which it has a lower opportunity cost.
C) must produce at a point beyond its PPF.
D) should produce at the midpoint of its PPF.
E) needs to have an absolute advantage in the production of at least one good.
52) Specialization and trade
A) does not benefit anyone.
B) allows nations to produce inside their individual production possibilities frontier.
C) allows nations to consume combinations of products that are outside their individual production possibilities frontier.
D) shifts the production possibilities frontier inward.
E) shifts the production possibilities frontier outward.
53) The United States is one of the richest nations in the world,
A) so it does not need to trade with poor nations in order to achieve any gains from trade.
B) so it might not have a comparative advantage in producing any goods.
C) but it can still benefit from specialization and trade.
D) so it must have a comparative advantage in the production of all goods.
E) so it must have an absolute advantage in the production of all goods.
54) Specialization and trade make a country better off because with trade, the country can consume at a point
A) outside its production possibilities frontier.
B) inside its production possibilities frontier.
C) on its production possibilities frontier.
D) on its trading partner's production possibilities frontier.
E) inside its trading partner's production possibilities frontier.
55) By specializing and trading, a country is able to
A) obtain the absolute advantage in the goods it produces.
B) consume but not to produce combinations of goods that lie beyond its production possibilities frontier.
C) produce but not to consume combinations of goods that lie beyond its production possibilities frontier.
D) both produce and consume combinations of goods that lie beyond its production possibilities frontier.
E) neither produce nor consume combinations of goods that lie beyond its production possibilities frontier.
56) With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.
A) cannot; can
B) can; cannot
C) can; can
D) cannot; cannot
E) None of the above answers is correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF.
57) In terms of a nation's production possibilities frontier, what impact does international trade have?
A) International trade shifts the nation's production possibilities frontier outward.
B) International trade shifts the nation's production possibilities frontier inward.
C) International trade allows the nation to consume at a point outside its production possibilities frontier.
D) International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported.
E) International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.
58) The gains from trade include:
i. lower prices from competition
ii. greater output from specialization
iii. greater variety of goods and services available
A) i and iii only
B) ii and iii only
C) i and ii only
D) i, ii, and iii
E) ii only
59) If a nation has an absolute advantage in producing a good, then it
A) will have a comparative advantage in producing that good.
B) will have no need to trade with other nations.
C) will always specialize in that good.
D) might or might not have a comparative advantage in producing that good.
E) will not have a comparative advantage in producing that good.
60) In one hour John can produce 20 loaves of bread or 8 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
A) Phyllis has a comparative advantage in producing bread.
B) John has a comparative advantage in producing cakes.
C) Phyllis has an absolute advantage in both goods.
D) John has an absolute advantage in both goods.
E) Phyllis has a comparative advantage in producing both cakes and bread.
