9. Figures 1(b) and (c) show that (a) Patria has an absolute advantage in the production of meat and potatoes. (b) Poveria has an absolute advantage in the production of meat.

(c) Poveria has an absolute disadvantage in the production of meat (d) Patria has an absolute advantage in the production of potatoes. 10. Referring to Figures 1(b) and (c), trade must be based on (a) absolute advantage. (b) comparative advantage. (c) mercantilism. (d) laissez faire. 11. Figures 1(a) and (b) show that trade must be based on (a) absolute advantage. (b) comparative advantage. (c) mercantilism. (d) laissez faire. Part 3: Market Demand and Supply 12. If consumers expect inflationary pressures for a given amount of fuel (a) fuel price and quantity demanded will fall. (b) fuel price and quantity demanded will increase. (c) fuel price will increase but quantity demanded will fall. (d) fuel price will fall but quantity demanded will increase. 13. If the price of fuel rises, the quantity of fuel demanded will most likely (a) increase. (b) fall. (c) stay the same. 14. A technological improvement will most likely have which of the following effects on output and prices? (a) A decrease in quantity and increase in price of a good. (b) An increase in quantity and decrease in price of a good. (c) A decrease in price and quantity of a good. 15. Suppose the supply of fuel, without regulation, is greater than the demand for fuel, (a) there will be a shortage of fuel in the market and the price of fuel will rise. (b) there will be a surplus of fuel in the market and the price of fuel will fall. (c) policy makers will most likely impose a price floor.Part 2: International Trade (Open Macroeconomics ) 7. If a nation can produce a good at a lower cost it must have (a) an absolute advantage. (b) a comparative advantage. (c) a trade restriction. Figure 1(a) Patria Figure 1 (b) Poveria Figure 1 (c) Patria Meat (oz) Meat (oz) Meat (oz) 24 8 14 8 12 32 24 26 48 56 Potatoes (oz) Potatoes (oz) Potatoes (oz) 8. Refer to Figures 1(a) and (b) for output per hour in an eight-hour workday. According to the figures, Poveria can exchange (a) 10 ounces of meat for 2 ounces of potatoes (b) 24 ounces of potatoes for 12 ounces of meat. (c) 14 ounces of meat for 26 ounces of potatoes. (d) 2 ounces of potatoes for 2 ounces of meat. 9. Figures 1(b) and (c) show that (a) Patria has an absolute advantage in the production of meat and potatoes. (b) Poveria has an absolute advantage in the production of meat