1. Using all of their resources, company A can make either 100 computers or 50 cell phones while company B can make either 200 computers or 150 cell phones. If both companies have the same quantity of resources, then _______ has an absolute advantage in computers while ______ has a comparative advantage in cell phones. A. Neither; both. B. Company A; company B. C. Company B; company A. D. Company A; company A. E. Company B; company B. 2. Company Q can produce 15 pairs of socks and 5 belts in one hour. Company Z can produce 20 pairs of socks and 20 belts in one hour. Which of the following is true? A. Only company Q can benefit from specialization and trade. B. Company Q has an absolute advantage in both socks and belts. C. Company Q has an absolute advantage in belts and a comparative advantage in socks. D. The opportunity cost for company Q is the same whether producing socks or belts. E. Company Q has a comparative advantage in socks and company X has an an absolute advantage in both socks and belts. 3. Use the production possibilities table attached to answer the following question. Assume constant opportunity costs for Steven and Matthew. Which of the following would be mutually beneficial terms of trade for both Stephen and Matthew. A. Steven offers Matthew 1 fish for 2 units of cheese. B. Steven offers Matthew 1 unit of cheese for 2 fish. C. Matthew offers Steven 1 fish for 3 units of cheese. D. Matthew offers Steven 1 unit of cheese for 3 fish. E. They cannot benefit from trade.

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