File: Chapter 011 International Trade and Trade Policy
Multiple Choice
1. An individual has an absolute advantage in producing pizzas if that individual:
A. has a lower opportunity cost of producing pizzas than anyone else.
B. can produce more pizzas in a given amount of time than anyone else.
C. has a higher opportunity cost of producing pizzas than anyone else.
D. charges the lowest price for pizzas.
Ans: B
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Absolute advantage means being able to produce more in a given time period.
2. If Al has an absolute advantage over Beth in preparing meals, then:
A. it takes Al more time to prepare a meal than Beth.
B. the problem of scarcity applies to Beth but not to Al.
C. Al’s opportunity cost of preparing a meal is lower than is Beth’s.
D. Al can prepare more meals in a given time period than Beth.
Ans: D
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Absolute advantage means being able to produce more in a given time period.
3. If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:
A. Les has a comparative advantage in producing pants.
B. Les has an absolute advantage in producing pants.
C. Eva has a comparative advantage in producing pants.
D. Les has both comparative and absolute advantage in producing pants.
Ans: B
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Absolute advantage means being able to produce more in a given time period.
4. If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers.
A. comparative
B. absolute
C. relative
D. natural
Ans: B
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Absolute advantage means being able to produce more in a given time period.
5. If you have a comparative advantage in a particular task, then:
A. you are better at it than other people.
B. you give up more to accomplish that task than do others.
C. you give up less to accomplish that task than do others.
D. you have specialized in that task, while others have not.
Ans: C
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Comparative advantage means having a lower opportunity cost.
6. Larry has a comparative advantage over his classmates in writing term papers if he:
A. can write term papers faster than his classmates.
B. has an absolute advantage in writing term papers.
C. always earns an A on his term papers.
D. has a lower opportunity cost of writing term papers than his classmates.
Ans: D
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Comparative advantage means having a lower opportunity cost.
7. If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.
A. comparative advantage
B. absolute advantage
C. comparative advantage and an absolute advantage
D. absolute advantage and possibly a comparative advantage.
Ans: A
Difficulty: 01 Easy
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Remember
AACSB: Reflective Thinking
Feedback: Comparative advantage means having a lower opportunity cost.
8. Which of the following statements is true?
A. Absolute advantage implies comparative advantage.
B. Comparative advantage does not require absolute advantage.
C. Absolute advantage requires comparative advantage.
D. Comparative advantage requires absolute advantage.
Ans: B
Difficulty: 02 Medium
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Understand
AACSB: Reflective Thinking
Feedback: Comparative advantage and absolute advantage differ: you can have both at the same time, but you can also have one but not the other.
9. If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ______ has a(n) ______ advantage in producing shoes.
A. Jane; absolute
B. Jane; comparative
C. Bob; absolute
D. Bob; comparative
Ans: A
Difficulty: 02 Medium
Learning Objective: 11-01
Topic: Comparative Advantage as a Basis for Trade
Blooms: Understand
AACSB: Reflective Thinking
Feedback: Absolute advantage means being able to produce more in a given time period.
21. Suppose it takes Paul 3 hours to bake a cake and 2 hours to move the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?
A. Paul has the absolute advantage in baking cakes
B. Paul has the comparative in mowing the lawn
C. Paul has the comparative in baking cakes
D. Paul has the absolute advantage in mowing the lawn.
Ans: C
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