Chapter 18 International Trade and Finance

| November 9, 2018

41)
Recall the application. Workers in the EU were more productive than workers in
Latvia in the 1990s, yet EU nations still purchased products from Latvia. This
is because Latvia ________ in the production of the products it sold to EU
nations.
A)
had an absolute advantage
B)
had a comparative advantage
C)
used fewer resources
D)
had a higher opportunity cost

42)
Recall the application. Workers in the EU were more productive than workers in
Latvia in the 1990s, yet despite this, EU nations chose to trade with Latvia.
Engaging in trade with Latvia allowed ________ to become more productive.
A)
workers in the EU but not workers in Latvia
B)
workers in Latvia but not workers in the EU
C)
neither workers in the EU nor in Latvia
D)
workers in both the EU and in Latvia

43)
If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her
opportunity cost of one gallon of beer is 4 gallons of wine.

44)
A comparative advantage is the ability of one person or nation to produce a
good at an opportunity cost that is lower than that of another person or
nation.

45)
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina
can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a
comparative advantage in producing milk shakes.

46)
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina
can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a
comparative advantage in producing banana splits.

47)
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina
can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a
comparative advantage in producing milk shakes.

48)
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina
can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a
comparative advantage in producing banana splits.

49)
If a person has an absolute advantage in some activity, she must have a
comparative advantage in that activity as well.

50)
If a person has a comparative advantage in some activity, she must have an
absolute advantage in that activity as well.

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