Chapter 18 International Trade and Finance

| November 9, 2018

1)
Markets exist
A)
so people can buy and sell things.
B)
because people are self-sufficient.
C)
because each person specializes in the production of many products.
D)
as an arrangement where buyers do not interact with sellers.

2)
To explore the rationale for specialization, economists use the
A)
marginal principle.
B)
principle of opportunity cost.
C)
real-nominal principle.
D)
principle of marginal exchange.

Kites /hour

Snowboards
/hour

Jesse

8

1

April

12

3

Table
18.1

3)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.1 shows how much of each good Jesse and April can paint in one hour.
Jesse’s opportunity cost of painting one kite is painting
A)
1/12 of a snowboard.
B)
1/8 of a snowboard.
C)
1/3 of a snowboard.
D)
3 snowboards.

4)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.1 shows how much of each good Jesse and April can paint in one hour.
Jesse’s opportunity cost of painting one snowboard is painting
A)
1/8 of a kite.
B)
1.5 kites.
C)
8 kites.
D)
12 kites.

5)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.1 shows how much of each good Jesse and April can paint in one hour.
April’s opportunity cost of painting one kite is painting
A)
1/12 of a snowboard.
B)
1/4 of a snowboard.
C)
3 snowboards.
D)
4 snowboards.

6)
Consider two individuals, Jesse and April, who hand paint kites and snowboards.
Table 18.1 shows how much of each good Jesse and April can paint in one hour.
April’s opportunity cost of painting one snowboard is painting
A) 1.5 kites.
B)
3 kites.
C)
4 kites.
D)
12 kites.

7)
Based on the data in Table 18.1
A)
Jesse should specialize in painting kites and trade for snowboards.
B)
Jesse should specialize in painting snowboards and trade for kites.
C)
April should specialize in both goods.
D)
Jesse should specialize in both goods.

8)
Based on the data in Table 18.1
A)
April should specialize in painting kites and trade for snowboards.
B)
April should specialize in painting snowboards and trade for kites.
C)
Jesse should specialize in both goods.
D)
April should specialize in both goods.

9)
Based on the data in Table 18.1, if Jesse and April choose to specialize and
trade, then
A)
April will specialize in painting kites and trade kites for snowboards.
B)
April will specialize in painting snowboards and trade snowboards for kites.
C)
Jesse will specialize in painting snowboards and trade snowboards for kites.
D)
None of the above; specialization and trade are not beneficial for Jesse and
April.

10)
The ability of one person or nation to produce a good at a lower absolute cost
than another is called a(n)
A)
market advantage.
B)
comparative advantage.
C)
absolute advantage.
D)
specialization advantage.

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