Quiz c
1. / Division of labor refers toA. / dividing tasks up into several subtasks and having one person perform these subtasks in a certain order.
B. / the separation of hourly workers from salaried workers.
C. / assigning different workers to different tasks.
D. / separating union workers from nonunion workers.
2. / The following graphs show the potential production for coats and books in Utopia and Transylvania. Both countries have equal amounts of resources available for production of coats or books. Which country has the comparative advantage in producing coats and books?
A. / Utopia has the comparative advantage in producing both goods.
B. / Utopia has the comparative advantage in producing coats; Transylvania has the comparative advantage in producing books.
C. / Utopia has the comparative advantage in producing books; Transylvania has the comparative advantage in producing coats.
D. / Neither country has a comparative advantage with either good because opportunity costs are equal.
3. / Trade between nations means that
A. / one country is richer than the other.
B. / one country becomes richer while the other becomes poorer.
C. / both trading nations show some gains.
D. / both trading nations will gain equally from the trade.
4. / The following graphs show the potential production for coats and books in Utopia and Transylvania. Both countries have equal amounts of resources available for production of coats or books. Which country has the absolute advantage in producing coats and books?
A. / Utopia has the absolute advantage in producing both goods.
B. / Utopia has the absolute advantage in producing coats; Transylvania has the absolute advantage in producing books.
C. / Utopia has the absolute advantage in producing books; Transylvania has the absolute advantage in producing coats.
D. / Transylvania can produce fewer goods with the same resources; therefore it has the absolute as well as comparative advantage.
5. / John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?
A. / Harry has a comparative advantage in ironing.
B. / Harry has a comparative advantage in typing.
C. / Harry has an absolute advantage in typing.
D. / Harry has an absolute advantage in ironing.
E. / Neither can gain from specialization and trade.
6. / The following table illustrates the production possibilities for John and Mary if they spend all of their time producing bread and cheese.
Bread / Cheese
John / 4 / 8
Mary / 8 / 14
Which of the following is true for John and Mary?
A. / Mary has an absolute advantage in producing cheese.
B. / John has a comparative advantage in producing cheese.
C. / Mary has a comparative advantage in producing bread.
D. / All of the above are true.
7. / Using graphs to illustrate the concepts,
A. / absolute advantage is shown with differences in the slope of the production possibilities frontiers, and comparative advantage is shown with a lower curve.
B. / absolute advantage is shown with a higher production possibilities frontier, and comparative advantage is shown with differences in the slope of the frontiers.
C. / absolute advantage in one good requires that the slope of the production possibilities frontier be steeper for that good.
D. / absolute advantage cannot be shown with a graph, but comparative advantage can be shown with the position of the curve.
8. / In the U.S., it requires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer. In France, it requires 25 labor hours to produce one bushel of wheat and 75 labor hours to produce one computer. The opportunity cost of one bushel of wheat in France is
A. / 4 computers.
B. / 25 labor hours.
C. / 3 computers.
D. / 1/3 computer.
9. / The person who can perform a task in the fewest hours
A. / has an absolute advantage in performing the task.
B. / has a comparative advantage in performing the task.
C. / has both an absolute advantage and a comparative advantage in performing the task.
D. / has an absolute advantage in performing the task but a comparative disadvantage in performing the task.
10. / Fred has an absolute advantage in painting and Barney has an absolute advantage in washing down walls. Assuming that the population consists only of Fred and Barney, we know that
A. / neither has a comparative advantage in either task.
B. / Fred has a comparative advantage in painting and Barney has a comparative advantage in washing down walls.
C. / Fred has a comparative advantage in washing down walls and Barney has a comparative advantage in painting.
D. / we can't tell who has a comparative advantage in painting or in washing down walls.
11. / Look at the following production possibilities table for drill presses and corn. The table shows the maximum combination of drills and bushels of corn that can be produced when all resources are fully employed.
Drill Presses 10 20 30 40 50
Corn (bushels) 150 140 120 90 500
Based on the above information,
A. / there is a constant trade-off between corn and drill presses.
B. / the opportunity cost of producing 30 drill presses instead of 20 drills is 120 bushels of corn.
C. / the opportunity cost of producing 40 drill presses instead of 30 drills is 30 bushels of corn.
D. / the production possibilities curve for drill presses and corn will be a straight line.
12. / In the U.S., it requires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer. In France, it requires 25 labor hours to produce one bushel of wheat and 75 labor hours to produce one computer. The U.S. and France could benefit from trade if the U.S. specializes in ______and France specializes in ______.
A. / computers; computers.
B. / computers; wheat.
C. / wheat; computers.
D. / wheat; wheat.
13. / In the U.S., it requires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer. In France, it requires 25 labor hours to produce one bushel of wheat and 75 labor hours to produce one computer. If the U.S. and France trade based on their comparative advantages, the U.S. will import ______and France will import ______.
A. / wheat; wheat.
B. / computers; computers.
C. / wheat; computers.
D. / computers; wheat.
14. / Assuming that only two goods are produced in the world, which of the following is true?
A. / It is impossible for a country to have an absolute advantage in producing both goods.
B. / It is possible for a country to have a comparative advantage in producing both goods.
C. / If trade exists and a country has an absolute advantage in producing one of the goods, that country will specialize in producing that good.
D. / If trade exists, and a country has a comparative advantage in producing one of the goods, that country will specialize in producing that good.
15. / In the following figure, the opportunity cost of a unit of wheat in terms of cotton is
A. / 1 for the U.S. and 5 for Egypt.
B. / 20 for the U.S. and 2 for Egypt.
C. / 1 for the U.S. and 2 for Egypt.
D. / 20 for the U.S. and 10 for Egypt.
16. / The average worker in the United States can produce 20 tons of coal or 10 tons of iron per hour. The average worker in Canada can produce 10 tons of coal or 10 tons of iron per hour. The United States has a comparative advantage in the production of
A. / iron.
B. / coal.
C. / both iron and coal.
D. / neither iron nor coal.
17. / If Taiwanese workers can produce everything more cheaply than American workers, then
A. / Americans can still gain by trading with Taiwan.
B. / Americans can only lose if they import from Taiwan.
C. / Taiwan can only lose if it trades with America.
D. / There are no gains from trade that are possible in this case.
18. / Trade between two countries
A. / makes both countries worse off.
B. / can benefit one country but not both.
C. / enables a country to move beyond (to a point outside) its production possibilities frontier.
D. / can only occur if one country is larger.
19. / Jim, Billy, and Bob are washing cars and cutting lawns for Ray's Neighborhood Services, Inc. In one day, Jim can wash four cars or cut two lawns; Billy can wash three cars or cut one lawn; Bob can wash one car or cut one lawn. Who has the comparative advantage in washing cars?
A. / Jim
B. / Billy
C. / Bob
D. / Billy and Bob have an equal comparative advantage.
20. / Is it possible for a country to have an absolute disadvantage and a comparative advantage?
A. / No, these are incompatible on theoretical grounds.
B. / No, theory prevents it, but some economists claim it could occur.
C. / Yes, this situation can occur.
D. / Yes, in theory, although not in reality.
21. / Division of labor increases the output of society by
A. / eliminating scarcity.
B. / reducing the choices people have to make to a more manageable number.
C. / ensuring that people are happier in performing their work.
D. / allowing resources to specialize in the tasks for which they have a comparative advantage.
22. / Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this information, you can determine that
A. / Economy A will have a higher output than Economy B.
B. / Economy A will have a lower output than Economy B.
C. / Economy A and Economy B will have identical outputs.
D. / Individuals in Economy A will have lower incomes than individuals in Economy B.
23. / When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that
A. / the average standard of living in the world will go down.
B. / the average standard of living in the world will go up.
C. / the world will move from a point on the production possibilities curve to a point inside the curve.
D. / worldwide economic efficiency will decrease.
24. / Which of the following statements is FALSE?
A. / As society increases its wealth, the problem of scarcity disappears.
B. / The factors of production are used to produce outputs that help society satisfy its wants.
C. / Even though a society faces the problem of scarcity, it does not necessarily suffer from poverty.
D. / Land and labor are both factors of production.
25. / Comparative advantage is always a(n) ______concept.
A. / absolute
B. / efficiency
C. / relative
D. / monetary