Question :
31) Refer to Figure 33-1. If Ireland and Japan were : 1384516
31) Refer to Figure 33-1. If Ireland and Japan were each to specialize in the good for which they have a comparative advantage, Ireland would produce ________ and Japan would produce ________.
A) 0 units of wool and 6 units of steel;
4 units of wool and 0 units of steel
B) 3 units of wool and 6 units of steel;
4 units of wool and 8 units of steel
C) 3 units of wool and 4 units of steel;
3 units of wool and 8 units of steel
D) 3 units of wool and 0 units of steel;
0 units of wool and 8 units of steel
E) 4 units of wool and 0 units of steel;
0 units of wool and 8 units of steel
32) Refer to Figure 33-2. Each of the two diagrams is illustrating
A) a budget line.
B) a terms of trade index.
C) a production possibilities boundary.
D) a downward sloping demand curve.
E) absolute advantage.
33) Refer to Figure 33-2. The diagrams illustrate that the ________ is lower in Austria than in Switzerland.
A) opportunity cost of producing shoes
B) opportunity cost of producing bicycles
C) total cost of producing shoes
D) average cost of producing bicycles
E) comparative advantage in producing bicycles
34) Refer to Figure 33-2. The diagrams illustrate that Switzerland
A) has an absolute advantage in the production of bicycles.
B) has a comparative advantage in the production of shoes.
C) has an absolute advantage in the production of shoes.
D) has a higher consumption of bicycles than Austria.
E) has a comparative advantage in the production of bicycles.
35) Refer to Figure 33-2. Assume that Austria and Switzerland do not engage in international trade. In that case,
A) Austria will produce all shoes and no bicycles.
B) Switzerland will produce all bicycles and no shoes.
C) each country will consume according to comparative advantage anyway.
D) the downward-sloping lines illustrate each country’s consumption possibilities.
E) each country will produce according to comparative advantage anyway.
36) Refer to Figure 33-2. If Austria and Switzerland engage in free trade with each other, it is likely that Switzerland will specialize in the production of ________ and Austria will specialize in the production of ________.
A) bicycles; bicycles
B) shoes; bicycles
C) shoes; shoes
D) bicycles; shoes
37) When opportunity costs differ between countries,
A) comparative advantages may not exist.
B) specialization and trade can lead to increases in the production of all commodities.
C) each country should produce only those goods for which it has an absolute advantage.
D) only the smaller countries will benefit from trade.
E) only the larger countries will benefit from trade.
38) When opportunity costs are identical between two countries for all goods,
A) there can be no gains from trade unless there are economies of scale in some of the products.
B) international trade will be advantageous only to the country that has an absolute advantage in the production of some commodity.
C) there will be gains from trade for both countries if one country has an absolute advantage in the production of some commodity.
D) absolute advantages will determine the gains from trade.
E) there will be absolute advantages from trade but no comparative advantages from trade.
39) Consider two countries that can produce wheat and coffee. The gains from trade when the two countries have different opportunity costs are realized when
A) production possibility boundaries shift inward.
B) the two countries continue to produce the same quantities of wheat and coffee.
C) each country has an absolute advantage in one of the two commodities.
D) resources are reallocated within the two countries such that each specializes in the production of the good in which it has an absolute advantage.
E) resources are reallocated within the two countries such that each specializes in the production of the good in which it has a comparative advantage.
40) If two countries each produce wool and cotton, the country with the lower opportunity cost for cotton (in terms of wool) will also have
A) a comparative advantage in the production of wool.
B) a comparative advantage in the production of cotton.
C) an absolute advantage in the production of wool.
D) an absolute advantage in the production of cotton.
E) an absolute advantage in the production of both wool and cotton.
