Chapter 18 International Trade and Finance

| November 9, 2018

21)
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas.
Nigel’s and Mia’s hourly productivity are shown in Table 18.3. Which of the
following is true?
A)
Nigel has an absolute advantage in producing hair pins but not bandanas.
B)
Nigel has an absolute advantage in producing bandanas but not hair pins.
C)
Nigel has an absolute advantage in producing both goods.
D)
Nigel does not have an absolute advantage in producing either good.

22)
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas.
Nigel’s and Mia’s hourly productivity are shown in Table 18.3. Which of the
following is true?
A)
Nigel has a comparative advantage in producing hair pins but not bandanas.
B)
Nigel has a comparative advantage in producing bandanas but not hair pins.
C)
Nigel has a comparative advantage in producing both goods.
D)
Nigel does not have a comparative advantage in producing either good.

23)
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas.
Nigel’s and Mia’s hourly productivity are shown in Table 18.3. Which of the
following is true?
A)
Nigel has both an absolute and comparative advantage in hair pin production.
B)
Nigel has both an absolute and comparative advantage in bandana production.
C)
Nigel has neither an absolute nor comparative advantage in hair pin production.
D)
Nigel has neither an absolute nor a comparative advantage in bandana
production.

24)
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas.
Nigel’s and Mia’s hourly productivity are shown in Table 18.3. Which of the
following is true?
A)
Mia has an absolute advantage in producing hair pins but not bandanas.
B)
Mia has an absolute advantage in producing bandanas but not hair pins.
C)
Mia has an absolute advantage in producing both goods.
D)
Mia does not have an absolute advantage in producing either good.

25)
Jimbo has a comparative advantage over Ned in producing a good if
A)
Jimbo can produce more of the good than Ned can in a given time period.
B)
Jimbo has a lower opportunity cost of producing the good than does Ned.
C)
Jimbo has to trade off more than Ned does to produce the good.
D)
Jimbo has a higher opportunity cost of producing the good than does Ned.

Wind Chimes

Sun Dials

Deena

9

12

Artie

6

8

Table
18.4

26)
Consider two individuals, Artie and Deena, who produce wind chimes and sun
dials. Artie’s and Deena’s weekly productivity are shown in Table 18.4. Which
of the following is true?
A)
Artie has a comparative advantage in producing wind chimes but not sun dials.
B)
Artie has a comparative advantage in producing sun dials but not wind chimes.
C)
Artie has a comparative advantage in producing both goods.
D)
Artie does not have a comparative advantage in producing either good.

27)
Consider two individuals, Artie and Deena, who produce wind chimes and sun
dials. Artie’s and Deena’s weekly productivity are shown in Table 18.4. Which
of the following is true?
A)
Deena has an absolute advantage in producing both goods, and a comparative
advantage in producing wind chimes.
B)
Deena has an absolute advantage in producing both goods, and a comparative
advantage in producing sun dials.
C)
Deena has an absolute and a comparative advantage in producing both goods.
D)
Deena has an absolute advantage in producing both goods, but no one has a
comparative advantage in producing either good.

28)
Trade results from
A)
comparative advantage.
B)
absolute advantage.
C)
self-sufficiency.
D)
diminishing returns.

29)
An import is a product
A)
produced in and purchased by residents of the home country.
B)
produced in and sold to the residents of a foreign country.
C)
produced in the home country and sold in another country.
D)
produced in a foreign country and purchased by the residents of the home
country.

30)
An export is a product
A)
produced in and purchased by residents of the home country.
B)
produced in and sold to the residents of a foreign country.
C)
produced in the home country and sold in another country.
D)
produced in a foreign country and purchased by the residents of the home
country.

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