Study Game - Topic 1.3

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Comparative Advantage and Gains from Trade

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Zachary Foust

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Study Game - Topic 1.3


Study Game - Topic 1.3Versión en línea Comparative Advantage and Gains from Trade por Zachary Foust 1 The table shows that Foustland can produce 10 widgets or 100 gadgets using all its available resources in a year. Mooreland can produce 10 widgets or 50 gadgets using all its available resources in a year. Based on the information provided above, which of the following must be true? a Foustland has the comparative advantage in the production of widgets. b Foustland has the absolute advantage in the production of gadgets. c Mooreland has the comparative advantage in the production of gadgets. d Mooreland has the absolute advantage in the production of widgets. 2 If two nations specialize according to their individual comparative advantages and engage in trade, then which of the following must be true? a Both nations can consume only what they produce. b Nations would be better off if they were self-sufficient. c If one nation gains from trade with the other nation, then the other nation will lose. d Both nations can consume beyond their individual production possibilities. 3 The table shows that Foustland can produce 10 widgets or 100 gadgets using all its available resources in a year. Mooreland can produce 10 widgets or 50 gadgets using all its available resources in a year. Based on the information provided above, which of the following are mutually beneficial terms of trade at which both Foustland and Mooreland will be willing to specialize and exchange? a 1 widget for 1 gadget b 1 widget for 6 gadgets c 1 widget for 17 gadgets d 1 widget for 20 gadgets 4 A country has the absolute advantage in the production of a good if a it can produce more of a good than another country. b it can produce a good for a lower opportunity cost than another country. c it can produce a good for a higher opportunity cost than another country. d it specializes and trades with another country. 5 A country has the comparative advantage in the production of a good if a it can produce more of a good than another country. b it can produce a good for a lower opportunity cost than another country. c it can produce a good for a higher opportunity cost than another country. d it remains self-sufficient. 6 Analyze the graph. Which of the following statements is true? a Foust has the absolute advantage in the production of corn. b Foust has the comparative advantage in the production of corn. c Neither Foust nor Ricardo have the comparative advantage in the production of wool. d Neither Foust nor Ricardo have the absolute advantage in the production of wool. 7 Analyze the graph. Which of the following statements is true? a Foust has the comparative advantage in the production of corn. b Foust has the comparative advantage in the production of wool. c Neither Foust nor Ricardo have the comparative advantage in the production of wool. d Both Foust and Ricardo have the absolute advantage in the production of wool. 8 The terms of trade definitely benefit one party but not the other if a one party specializes in the production of a good. b the producer receives more than the opportunity cost of production. c the producer receives less than the opportunity cost of production. d it is cheaper for the consumer to buy a good than to produce it. 9 Consumption outside of the production possibilities curve is a not feasible under any circumstances. b inefficient. c possible if a country is self-sufficient. d possible with specialization and trade. 10 Which of the following best illustrates the concept of specialization? a A point inside the production possiblities curve b A point outside the production possibilities curve c A point on the Y-intercept of the production possibilities curve d An outward shift of the production possibilities curve

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Study Game - Topic 1.3

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Study Game - Topic 1.3Versión en línea

por Zachary Foust

The table shows that Foustland can produce 10 widgets or 100 gadgets using all its available resources in a year. Mooreland can produce 10 widgets or 50 gadgets using all its available resources in a year. Based on the information provided above, which of the following must be true?

If two nations specialize according to their individual comparative advantages and engage in trade, then which of the following must be true?

A country has the absolute advantage in the production of a good if

A country has the comparative advantage in the production of a good if

Analyze the graph. Which of the following statements is true?

Analyze the graph. Which of the following statements is true?

The terms of trade definitely benefit one party but not the other if

Consumption outside of the production possibilities curve is

Which of the following best illustrates the concept of specialization?