Question 1

The difference between production possibilities frontiers that are bowed out and those that are straight lines is that

Question 1 options:

	bowed-out production possibilities frontiers apply to economies that face tradeoffs, whereas straight-line production possibilities frontiers apply to economies that do not face tradeoffs.
	bowed-out production possibilities frontiers apply to economies in which resources are not specialized, whereas straight-line production possibilities frontiers apply to economies in which resources are specialized.
	bowed-out production possibilities frontiers illustrate increasing opportunity cost, whereas straight-line production possibilities frontiers illustrate constant opportunity cost.
	straight-line production possibilities frontiers illustrate real-world conditions, whereas bowed-out production possibilities frontiers illustrate more simplistic assumptions.

Question 2

If labor in Mexico is less productive than labor in the United States in all areas of production,

Question 2 options:

	neither nation can benefit from trade.
	Mexico can benefit from trade but the United States cannot.
	the United States will have a comparative advantage relative to Mexico in the production of all goods.
	both Mexico and the United States still can benefit from trade.

Figure 3-1

Question 3

Refer to Figure 3-1.

The opportunity cost of 1 bushel of corn is

Question 3 options:

	4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Paul has the comparative advantage in growing corn.
	4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn.
	5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Paul has the comparative advantage in growing corn.
	5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn.

Question 4

Refer to Figure 3-1.

Assume both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they are the only producers of wheat and corn, then total production of wheat and corn is

Question 4 options:

	8 bushels of wheat and 7 bushels of corn.
	7 bushels of wheat and 6 bushels of corn.
	6 bushels of wheat and 8 bushels of corn.
	7 bushels of wheat and 7 bushels of corn.

Question 5

Refer to Figure 3-1.

Which of the following statements is correct?

Question 5 options:

	8 Paul has an absolute advantage in both wheat and corn.
	Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn.
	Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn.
	Cliff has an absolute advantage in both wheat and corn.

Question 6

Refer to Figure 3-1.

Which of the following statements is correct?

Question 6 options:

	Paul has a comparative advantage in both wheat and corn.
	Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn.
	Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn.
	Cliff has a comparative advantage in both wheat and corn.

Question 7

Production is efficient if the economy is producing at a point

Question 7 options:

	on the production possibilities frontier.
	outside the production possibilities frontier.
	on or inside the production possibilities frontier.
	inside the production possibilities frontier.

Figure 2-3

Question 8

Refer to Figure 2-3.

The economy has the ability to produce at which point or points?

Question 8 options:

	B, D, E
	A, B, D, E
	D, C
	D

Question 9

Refer to Figure 2-3.

Efficient production is represented by which point or points?

Question 9 options:

	B, E
	A, B, E
	D
	C

Question 10

Suppose Haiti has a comparative advantage over other countries in producing sugar, but other countries have an absolute advantage over Haiti in producing sugar. If trade in sugar is allowed, Haiti

Question 10 options:

	will import sugar.
	will export sugar.
	will either export sugar or export sugar, but it is not clear from the given information.
	would have nothing to gain either from exporting or importing sugar.