Chapter 18 International Trade and Finance

| November 9, 2018

11)
The ability of one person or nation to produce a good at a lower opportunity
cost than another is called a(n)
A)
market advantage.
B)
comparative advantage.
C)
absolute advantage.
D)
specialization advantage.

12)
An individual or country that has a comparative advantage in the production of
one good
A)
must have an absolute advantage in the good’s production.
B)
must not have an absolute advantage in the good’s production.
C)
may or may not have an absolute advantage in the good’s production.
D)
must not have an absolute advantage in the production of the other good.

Kites /hour

Snowboards
/hour

Jesse

8

1

April

12

3

Table
18.2

13)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.2 shows how much of each good Jesse and April can paint in one hour.
Which of the following is true?
A)
April has an absolute advantage in painting kites but not snowboards.
B)
April has an absolute advantage in painting snowboards but not kites.
C)
April has an absolute advantage in painting both goods.
D)
April does not have an absolute advantage in painting either good.

14)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.2 shows how much of each good Jesse and April can paint in one hour.
Which of the following is true?
A)
April has a comparative advantage in painting kites but not snowboards.
B)
April has a comparative advantage in painting snowboards but not kites.
C)
April has a comparative advantage in painting both goods.
D)
April does not have a comparative advantage in painting either good.

15)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.2 shows how much of each good Jesse and April can paint in one hour.
Which of the following is true?
A)
April has both an absolute and comparative advantage in painting kites.
B)
April has both an absolute and comparative advantage in painting snowboards.
C)
April has neither an absolute nor comparative advantage in painting kites.
D)
April has neither an absolute nor a comparative advantage in painting
snowboards.

16)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.2 shows how much of each good Jesse and April can paint in one hour.
Which of the following is true?
A)
Jesse has an absolute advantage in painting kites but not snowboards.
B)
Jesse has an absolute advantage in painting snowboards but not kites.
C)
Jesse has an absolute advantage in painting both goods.
D)
Jesse has an absolute advantage in painting neither good.

Hair Pins
/hour

Bandanas /hour

Nigel

4

10

Mia

9

3

Table
18.3

17)
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. Nigel’s
opportunity cost of producing one bandana is
A)
1/4 of a hair pin.
B)
2/5 of a hair pin.
C)
2.5 hair pins.
D)
4 hair pins.

18)
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. Nigel’s
opportunity cost of producing one hair pin is
A)
1/3 of a bandana.
B)
2.5 bandanas.
C)
3 bandanas.
D)
10 bandanas.

19)
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. Mia’s
opportunity cost of producing one bandana is
A)
1/3 of a hair pin.
B)
2.5 hair pins.
C)
3 hair pins.
D)
9 hair pins.

20)
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. Mia’s
opportunity cost of producing one hair pin is
A)
1/3 of a bandana.
B)
2.5 bandanas.
C)
3 bandanas.
D)
10 bandanas.

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