Economics Final Exam [Chap. 3-4]

Question 1 of 40

1

If a nation has an absolute advantage in the production of a good,

Select one of the following:

it can benefit by restricting imports of that good.
it will specialize in the production of that good and export it.
it can produce that good using fewer resources than its trading partner.
none of these answers.
it can produce that good at a lower opportunity cost than its trading partner.

Explanation

Question 2 of 40

1

If a nation has a comparative advantage in the production of a good,

Select one of the following:

it can produce that good at a lower opportunity cost than its trading partner.
it can benefit by restricting imports of that good.
it can produce that good using fewer resources than its trading partner.
it must be the only country with the ability to produce that good.
none of these answers.

Explanation

Question 3 of 40

1

Which of the following statements about trade is true?

Select one of the following:

Unrestricted international trade benefits every person in a country equally.
Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.
People that are skilled at all activities cannot benefit from trade.
Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage.

Explanation

Question 4 of 40

1

According to the principle of comparative advantage,

Select one of the following:

countries should specialize in the production of goods that they enjoy consuming.
countries with a comparative advantage in the production of every good need not specialize.
countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners.
countries should specialize in the production of goods for which they use fewer resources in production than their trading partners.

Explanation

Question 5 of 40

1

Which of the following statements is true?

Select one of the following:

A self-sufficient country can, at best, consume on its production possibilities frontier.
Only countries with an absolute advantage in the production of every good should strive to be self-sufficient.
A self-sufficient country consumes outside its production possibilities frontier.
Self-sufficiency is the road to prosperity for most countries.

Explanation

Question 6 of 40

1

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

Select one of the following:

the domestic price of 1 ring is 1/4 of a watch.
the domestic price of 1 ring is 3 watches.
the domestic price of 1 ring is 1/3 of a watch.
the domestic price of 1 ring is 12 watches.
the domestic price of 1 ring is 4 watches.

Explanation

Question 7 of 40

1

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

Select one of the following:

the opportunity cost of 1 watch is 1/4 of a ring.
the opportunity cost of 1 watch is 4 rings.
the opportunity cost of 1 watch is 3 rings.
the opportunity cost of 1 watch is 12 rings.
the opportunity cost of 1 watch is 1/3 of a ring.

Explanation

Question 8 of 40

1

Refer to Figure 3-1. Which of the following statements about absolute advantage is true?

Select one of the following:

Australia has an absolute advantage in the production of food while Korea has an absolute advantage in the production of electronics.
Korea has an absolute advantage in the production of food while Australia has an absolute advantage in the production of electronics.
Australia has an absolute advantage in the production of both food and electronics.
Korea has an absolute advantage in the production of both food and electronics.

Explanation

Question 9 of 40

1

Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Australia is

Select one of the following:

4 units of food.
5 units of food.
1/5 of a unit of food.
1/4 of a unit of food.

Explanation

Question 10 of 40

1

Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Korea is

Select one of the following:

4 units of food.
1/4 units of food.
2 units of food.
1/2 of a unit of food.

Explanation

Question 11 of 40

1

Refer to Figure 3-1. The opportunity cost of 1 unit of food in Australia is

Select one of the following:

1/5 of a unit of electronics.
5 units of electronics.
4 units of electronics.
1/4 of a unit of electronics.

Explanation

Question 12 of 40

1

Refer to Figure 3-1. The opportunity cost of 1 unit of food in Korea is

Select one of the following:

1/2 of a unit of electronics.
1/4 units of electronics.
2 units of electronics.
4 units of electronics.

Explanation

Question 13 of 40

1

Refer to Figure 3-1. Which of the following statements about comparative advantage is true?

Select one of the following:

Australia has a comparative advantage in the production of both food and electronics.
Korea has a comparative advantage in the production of both food and electronics.
Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics.
Korea has a comparative advantage in the production of food while Australia has a comparative advantage in the production of electronics.
Neither country has a comparative advantage.

Explanation

Question 14 of 40

1

Refer to Figure 3-1. Korea should

Select one of the following:

produce neither good because it has an absolute disadvantage in the production of both goods.
specialize in electronics production, export electronics, and import food.
produce both goods because neither country has a comparative advantage.
specialize in food production, export food, and import electronics

Explanation

Question 15 of 40

1

Refer to Figure 3-1. Prices of electronics can be stated in terms of units of food. What is the range of prices of electronics for which both countries could gain from trade?

Select one of the following:

The price must be greater than 1/5 of a unit of food but less than 1/4 of a unit of food.
The price must be greater than 4 units of food but less than 5 units of food.
The price must be greater than 1/4 of a unit of food but less than 1/2 of a unit of food.
The price must be greater than 2 units of food but less than 4 units of food.

Explanation

Question 16 of 40

1

Suppose the world consists of two countries: the UK and Spain. Further, suppose there are only two goods--food and clothing. Which of the following statements is true?

Select one of the following:

If the UK has an absolute advantage in the production of food, then Spain must have an absolute advantage in the production of clothing.
none of these answers.
If the UK has a comparative advantage in the production of food, Spain might also have a comparative advantage in the production of food.
If the UK has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
If the UK has a comparative advantage in the production of food, then Spain must have a comparative advantage in the production of clothing.

Explanation

Question 17 of 40

1

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Argentina has a comparative advantage in the production of

Select one of the following:

neither fruit nor beef.
fruit
both fruit and beef.
beef

Explanation

Question 18 of 40

1

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Peru will export

Select one of the following:

both fruit and beef.
beef.
fruit
neither fruit nor beef.

Explanation

Question 19 of 40

1

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. The opportunity cost of producing a metric ton of beef in Peru is

Select one of the following:

1/3 ton of fruit.
6 tons of fruit.
1 ton of fruit.
2 tons of fruit.
3 tons of fruit.

Explanation

Question 20 of 40

1

Joe is a tax accountant. He receives €100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?

Select one of the following:

none of these answers.
Joe should hire the assistant as long as he pays the assistant less than €25 per hour.
Joe should not hire an assistant because the assistant cannot type as fast as he.
Joe should hire the assistant as long as he pays the assistant less than €100 per hour.

Explanation

Question 21 of 40

1

A perfectly competitive market has

Select one of the following:

firms that set their own prices.
only one seller.
at least a few sellers.
many buyers and sellers.
none of these answers.

Explanation

Question 22 of 40

1

If an increase in the price of blue jeans leads to an increase in the demand for
tennis shoes, then blue jeans and tennis shoes are

Select one of the following:

complements.
inferior goods.
normal goods.
none of these answers.
substitutes

Explanation

Question 23 of 40

1

The law of demand states that an increase in the price of a good

Select one of the following:

increases the supply of that good.
decreases the quantity demanded for that good.
decreases the demand for that good.
increases the quantity supplied of that good.
none of these answers.

Explanation

Question 24 of 40

1

The law of supply states that an increase in the price of a good

Select one of the following:

none of these answers.
increases the quantity supplied of that good.
increases the supply of that good.
decreases the demand for that good.
decreases the quantity demanded for that good.

Explanation

Question 25 of 40

1

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

Select one of the following:

a normal good.
none of these answers.
an inferior good.
a substitute good.
a complementary good.

Explanation

Question 26 of 40

1

A monopolistic market has

Select one of the following:

many buyers and sellers.
none of these answers.
firms that are price takers.
only one seller.
at least a few sellers.

Explanation

Question 27 of 40

1

Which of the following shifts the demand for watches to the right?

Select one of the following:

an increase in the price of watches
none of these answers
a decrease in the price of watch batteries if watch batteries and watches are complements
a decrease in consumer incomes if watches are a normal good
a decrease in the price of watches

Explanation

Question 28 of 40

1

All of the following shift the supply of watches to the right except

Select one of the following:

an advance in the technology used to manufacture watches.
an increase in the price of watches.
All of these answers cause an increase in the supply of watches.
a decrease in the wage of workers employed to manufacture watches.
manufacturers' expectation of lower watch prices in the future.

Explanation

Question 29 of 40

1

If the price of a good is above the equilibrium price,

Select one of the following:

there is a surplus and the price will rise.
there is a shortage and the price will fall.
there is a shortage and the price will rise.
the quantity demanded is equal to the quantity supplied and the price remains unchanged.
there is a surplus and the price will fall.

Explanation

Question 30 of 40

1

If the price of a good is below the equilibrium price,

Select one of the following:

there is a shortage and the price will rise.
the quantity demanded is equal to the quantity supplied and the price remains unchanged.
there is a shortage and the price will fall.
there is a surplus and the price will rise.
there is a surplus and the price will fall.

Explanation

Question 31 of 40

1

If the price of a good is equal to the equilibrium price,

Select one of the following:

there is a shortage and the price will fall.
the quantity demanded is equal to the quantity supplied and the price remains unchanged.
there is a surplus and the price will rise.
there is a shortage and the price will rise.
there is a surplus and the price will fall.

Explanation

Question 32 of 40

1

An increase (rightward shift) in the demand for a good will tend to cause

Select one of the following:

an increase in the equilibrium price and quantity.
none of these answers.
an increase in the equilibrium price and a decrease in the equilibrium quantity.
a decrease in the equilibrium price and an increase in the equilibrium quantity.
a decrease in the equilibrium price and quantity.

Explanation

Question 33 of 40

1

A decrease (leftward shift) in the supply for a good will tend to cause

Select one of the following:

an increase in the equilibrium price and quantity.
a decrease in the equilibrium price and an increase in the equilibrium quantity.
none of these answers.
a decrease in the equilibrium price and quantity.
an increase in the equilibrium price and a decrease in the equilibrium quantity.

Explanation

Question 34 of 40

1

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect

Select one of the following:

the equilibrium quantity to rise and the equilibrium price to rise.
the equilibrium quantity to rise and the equilibrium price to fall.
the equilibrium quantity to rise and the equilibrium price to remain constant.
the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise.
the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

Explanation

Question 35 of 40

1

Suppose there is an increase in both the supply and demand for personal computers. Further, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect

Select one of the following:

the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
the equilibrium quantity to rise and the equilibrium price to rise.
the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
the equilibrium quantity to rise and the equilibrium price to fall.
the equilibrium quantity to rise and the equilibrium price to remain constant.

Explanation

Question 36 of 40

1

Which of the following statements is true about the impact of an increase in the price of lettuce?

Select one of the following:

Both the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall.
The supply of lettuce will decrease.
The demand for lettuce will decrease.
The equilibrium price and quantity of salad dressing will fall.
The equilibrium price and quantity of salad dressing will rise.

Explanation

Question 37 of 40

1

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Select one of the following:

Price will decrease; quantity is ambiguous.
The impact on both price and quantity is ambiguous.
Price will increase; quantity will increase.
Price will increase; quantity will decrease.
Price will increase; quantity is ambiguous.

Explanation

Question 38 of 40

1

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

Select one of the following:

There is an increase in the quantity demanded of apples and in the supply for apples.
There is an increase in the demand and supply of apples.
There is an increase in the demand for apples and a decrease in the supply of apples.
There is a decrease in the quantity demanded of apples and an increase in the supply for apples.
There is an increase in the demand for apples and an increase in the quantity supplied of apples.

Explanation

Question 39 of 40

1

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

Select one of the following:

The impact on both price and quantity is ambiguous.
Price will decrease; quantity is ambiguous.
Price will increase; quantity will decrease.
Price will increase; quantity is ambiguous.
Price will increase; quantity will increase.

	Created by Good Guy Beket over 5 years ago

Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Final Exam Prep) Quiz on Economics Final Exam [Chap. 3-4], created by Good Guy Beket on 27/12/2018.

Economics Final Exam [Chap. 3-4]

Question 1 of 40

If a nation has an absolute advantage in the production of a good,

Select one of the following:

Explanation

Question 2 of 40

If a nation has a comparative advantage in the production of a good,

Select one of the following:

Explanation

Question 3 of 40

Which of the following statements about trade is true?

Select one of the following:

Explanation

Question 4 of 40

According to the principle of comparative advantage,

Select one of the following:

Explanation

Question 5 of 40

Which of the following statements is true?

Select one of the following:

Explanation

Question 6 of 40

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

Select one of the following:

Explanation

Question 7 of 40

Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,

Select one of the following:

Explanation

Question 8 of 40

Refer to Figure 3-1. Which of the following statements about absolute advantage is true?

Select one of the following:

Explanation

Question 9 of 40

Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Australia is

Select one of the following:

Explanation

Question 10 of 40

Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Korea is

Select one of the following:

Explanation

Question 11 of 40

Refer to Figure 3-1. The opportunity cost of 1 unit of food in Australia is

Select one of the following:

Explanation

Question 12 of 40

Refer to Figure 3-1. The opportunity cost of 1 unit of food in Korea is

Select one of the following:

Explanation

Question 13 of 40

Refer to Figure 3-1. Which of the following statements about comparative advantage is true?

Select one of the following:

Explanation

Question 14 of 40

Refer to Figure 3-1. Korea should

Select one of the following:

Explanation

Question 15 of 40

Refer to Figure 3-1. Prices of electronics can be stated in terms of units of food. What is the range of prices of electronics for which both countries could gain from trade?

Select one of the following:

Explanation

Question 16 of 40

Suppose the world consists of two countries: the UK and Spain. Further, suppose there are only two goods--food and clothing. Which of the following statements is true?

Select one of the following:

Explanation

Question 17 of 40

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Argentina has a comparative advantage in the production of

Select one of the following:

Explanation

Question 18 of 40

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Peru will export

Select one of the following:

Explanation

Question 19 of 40

Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. The opportunity cost of producing a metric ton of beef in Peru is

Select one of the following:

Explanation

Question 20 of 40

Joe is a tax accountant. He receives €100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?

If an increase in the price of blue jeans leads to an increase in the demand for
tennis shoes, then blue jeans and tennis shoes are