Q1

When one nation can produce a product using fewer resources relative to another nation, it is said to have a(n) _____ in producing that product. When one nation can produce a product at a lower cost in terms of other goods, it is said to have a(n) _____ in producing that product.

absolute advantage; comparative advantage

economy of scale; diseconomy of scale

production efficiency; inflation deficiency

relative advantage; marginal advantage

Q 2

Alternate Outputs from One Day's Labor Input:

USA: 12 bushels of wheat or 6 yards of textiles. India: 6 bushels of wheat or 12 yards of textiles.

From the data, India:

should export wheat to the USA.

has a comparative advantage over the USA in the production of wheat.

has an absolute advantage over the USA in the production of textiles.

has an absolute advantage over the USA in the production of wheat.

Q3

Alternate Outputs from One Day's Labor Input:

USA: 12 bushels of wheat or 6 yards of textiles. India: 6 bushels of wheat or 12 yards of textiles.

The opportunity cost of one bushel of wheat in India is:

Group of answer choices

5 yards of textiles.

2 yards of textiles.

4 yards of textiles.

12 yards of textiles.

Q4

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following terms of trade between apples and oranges would allow both Alpha and Beta to gain by specialization and exchange?

2 apples for 3 oranges

1 orange for 0.2 apples

3 apples for 3 oranges

1 apple for 3 oranges

Q5

Which of the following is true?

A nation can have a comparative advantage in the production of every good, but not an absolute advantage.

A nation cannot have an absolute advantage in the production of every good.

A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.

A nation cannot have a comparative advantage in the production of every good.

Q6

The concept of economies of scale means that as the measure of output goes up, average costs of production _____, at least up to a point.

remain constant

increase

are incalculable

decline