1) Refer to the information provided in Figure 18 1 below to answer the question that follows has a comparative advantage in the production of alfalfa has a comparative advantage in the production of soybeans A United States United States B United States Canada C Canada United States D Canada Canada 2) The opportunity cost of a bushel of soybeans in the U S is the opportunity cost of a bushel of soybeans in the Canada is A 600 bushels of alfalfa 200 bushels of alfalfa B 300 bushels of alfalfa 0 bushels of alfalfa C 2 bushels of alfalfa 1 bushel of alfalfa D 1 2 bushels of alfalfa 1 bushel of alfalfa 3) The limits to the Terms of Trade, for each bushel of soybeans, are A 3 bushels of alfalfa and 1 3 of a bushel of alfalfa B 2 bushels of alfalfa and 1 bushel of alfalfa C 2 bushels of alfalfa and 1 3 of a bushel of alfalfa D 3 bushels of alfalfa and 1 bushel of alfalfa Refer to the information provided in Figure 18 1 below to answer the question that follows 4) Which of the following statements is TRUE A Only Canada can benefit from trade because the United States has an absolute advantage in the production of both soybeans and alfalfa B Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa C Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans D Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in the production of both soybeans and alfalfa 5) The case for free trade is based on the A theory of balanced growth B theory of absolute advantage C argument for a diversified economy D theory of comparative advantage 6) tariff is A a limit on the quantity of a good that can be imported into a country B a tax on imports C a government payment made to domestic firms to encourage exports D the difference between the price a product sells for in the country it is produced in and the price it is sold for in another country 7) According to the theory of comparative advantage, a country A exports the goods in which it has a comparative advantage B imposes tariffs on goods for which it does not have comparative advantage C imports the goods in which it has a comparative advantage D exports goods in which it has absolute advantage 8) Country A has a comparative advantage over Country B in the production of shoes, if A Country A can produce shoes at a lower monetary cost than Country B can B Country A can produce shoes using fewer resources than Country B can C the demand for shoes is higher in Country A than in Country B D Country A can produce shoes at a lower cost in terms of other goods than Country B can 9) The United States imports televisions from Japan and Japan imports computer chips from the United States If the theory of comparative advantage guides trade between the two countries, it must be TRUE that A the opportunity cost of producing televisions in Japan is lower than that in the United States B the opportunity cost of producing computer chips in the United States is lower than that in Japan C the United States has comparative advantage in producing computer chips D All of these 10) If the slopes of the production possibility frontiers involving sugar and rice in countries A and B are equal, A the opportunity cost of producing sugar is less in Country A B the opportunity cost of producing rice is less in Country B C specialization does not benefit either countries D None of these 11) The terms of trade refers to A the documents that two countries sign in order to facilitate trade B the conditions imposed by the importing country regarding the quality of the imported goods C the exchange rate determined by the exporting and the importing countries D the ratio at which one country trades a domestic product for an imported product 12) Specialization and trade allow a country to A produce and consume on its production possibility frontier B produce and consume inside its production possibility frontier C produce and consume outside its production possibility frontier D produce on its production possibility frontier and consume outside it 13) According to comparative advantage, trade between two countries A maximizes the amount of inputs that are used in the production of all products B guarantees that consumption levels will be equal in the two countries C will benefit all the industries in each of the countries D allows each of the trading countries to use its resources most efficiently 14) According to the theory of comparative advantage, a country should A specialize in the production and export of goods with the highest opportunity cost B specialize in the production and export of goods with the lowest production cost C specialize in the production and export of goods with the lowest opportunity cost D specialize in the production and export of goods with the lowest average cost 15) The United States imports televisions from Japan and Japan imports computer chips from the United States If the theory of comparative advantage guides trade between the two countries, it must be TRUE that A the United States has comparative advantage in producing computer chips B the opportunity cost of producing computer chips in the United States is lower than that in Japan C the opportunity cost of producing televisions in Japan is lower than that in the United States D All of these 16) If Brazil has a comparative advantage in the production of coffee over the United States, then A Brazil also must also have an absolute advantage in the production of coffee B the United States has an absolute advantage in the production of coffee C Brazil can produce coffee at a lower opportunity cost than the United States D the United States must be able to produce less coffee than Brazil 17) Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods If India has a lower opportunity cost for producing rice, then A India has a comparative advantage in the production of rice, and specialization and trade between the two countries can be mutually beneficial B India has a comparative advantage in the production of rice, but it is outweighed by Japan's absolute advantage in rice production C Japan still has a comparative advantage in the production of both goods D India has a comparative advantage in rice production, but there will be no gains from specialization and trade 18) Specialization and trade allow a country to A produce on its production possibility frontier and consume outside it B produce and consume outside its production possibility frontier C produce and consume on its production possibility frontier D produce and consume inside its production possibility frontier

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1) Refer to the information provided in Figure 18.1 below to answer the question that follows. > __________ has a comparative advantage in the production

1) Refer to the information provided in Figure 18.1 below to answer the question that follows.

__________ has a comparative advantage in the production of alfalfa; ___________ has a comparative advantage in the production of soybeans.

A.United States; United States
B.United States; Canada
C.Canada; United States
D.Canada; Canada

2) The opportunity cost of a bushel of soybeans in the U.S. is _________; the opportunity cost of a bushel of soybeans in the Canada is _________.

A.600 bushels of alfalfa; 200 bushels of alfalfa
B.300 bushels of alfalfa; 0 bushels of alfalfa
C.2 bushels of alfalfa; 1 bushel of alfalfa
D.1/2 bushels of alfalfa; 1 bushel of alfalfa

3) The limits to the Terms of Trade, for each bushel of soybeans, are

A.3 bushels of alfalfa and 1/3 of a bushel of alfalfa.
B.2 bushels of alfalfa and 1 bushel of alfalfa.
C.2 bushels of alfalfa and 1/3 of a bushel of alfalfa.
D.3 bushels of alfalfa and 1 bushel of alfalfa.

Refer to the information provided in Figure 18.1 below to answer the question that follows.

4) Which of the following statements is TRUE?

A.Only Canada can benefit from trade because the United States has an absolute advantage in the production of both soybeans and alfalfa.
B.Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa.
C.Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans.
D.Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in the production of both soybeans and alfalfa.

5) The case for free trade is based on the

A.theory of balanced growth.
B.theory of absolute advantage.
C.argument for a diversified economy.
D.theory of comparative advantage.

6) tariff is

A.a limit on the quantity of a good that can be imported into a country.
B.a tax on imports.
C.a government payment made to domestic firms to encourage exports.
D.the difference between the price a product sells for in the country it is produced in and the price it is sold for in another country.

7) According to the theory of comparative advantage, a country

A.exports the goods in which it has a comparative advantage.
B.imposes tariffs on goods for which it does not have comparative advantage.
C.imports the goods in which it has a comparative advantage.
D.exports goods in which it has absolute advantage.

8) Country A has a comparative advantage over Country B in the production of shoes, if

A.Country A can produce shoes at a lower monetary cost than Country B can.
B.Country A can produce shoes using fewer resources than Country B can.
C.the demand for shoes is higher in Country A than in Country B.
D.Country A can produce shoes at a lower cost in terms of other goods than Country B can.

9) The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be TRUE that

A.the opportunity cost of producing televisions in Japan is lower than that in the United States.
B.the opportunity cost of producing computer chips in the United States is lower than that in Japan.
C.the United States has comparative advantage in producing computer chips.
D.All of these

10) If the slopes of the production possibility frontiers involving sugar and rice in countries A and B are equal,

A.the opportunity cost of producing sugar is less in Country A.
B.the opportunity cost of producing rice is less in Country B.
C.specialization does not benefit either countries.
D.None of these

11) The terms of trade refers to

A.the documents that two countries sign in order to facilitate trade.
B.the conditions imposed by the importing country regarding the quality of the imported goods.
C.the exchange rate determined by the exporting and the importing countries.
D.the ratio at which one country trades a domestic product for an imported product.

12) Specialization and trade allow a country to

A.produce and consume on its production possibility frontier.
B.produce and consume inside its production possibility frontier.
C.produce and consume outside its production possibility frontier.
D.produce on its production possibility frontier and consume outside it.

13) According to comparative advantage, trade between two countries

A.maximizes the amount of inputs that are used in the production of all products.
B.guarantees that consumption levels will be equal in the two countries.
C.will benefit all the industries in each of the countries.
D.allows each of the trading countries to use its resources most efficiently.

14) According to the theory of comparative advantage, a country should

A.specialize in the production and export of goods with the highest opportunity cost.
B.specialize in the production and export of goods with the lowest production cost.
C.specialize in the production and export of goods with the lowest opportunity cost.
D.specialize in the production and export of goods with the lowest average cost.

15) The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be TRUE that

A.the United States has comparative advantage in producing computer chips.
B.the opportunity cost of producing computer chips in the United States is lower than that in Japan.
C.the opportunity cost of producing televisions in Japan is lower than that in the United States.
D.All of these

16) If Brazil has a comparative advantage in the production of coffee over the United States, then

A.Brazil also must also have an absolute advantage in the production of coffee.
B.the United States has an absolute advantage in the production of coffee.
C.Brazil can produce coffee at a lower opportunity cost than the United States.
D.the United States must be able to produce less coffee than Brazil

17) Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then

A.India has a comparative advantage in the production of rice, and specialization and trade between the two countries can be mutually beneficial.
B.India has a comparative advantage in the production of rice, but it is outweighed by Japan's absolute advantage in rice production.
C.Japan still has a comparative advantage in the production of both goods.
D.India has a comparative advantage in rice production, but there will be no gains from specialization and trade.

18) Specialization and trade allow a country to