All the following questions are from previous exams for Economics 103. They are duplicates of the questions found in the Topic sub-sections. Show Exercises 2.21. Consider the PPF diagram below. Given the PPF illustrated, what is the opportunity cost of moving from B to A? a) 5 coconuts. The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y. 2. Which of the following statements is TRUE? I. The marginal cost of producing x is higher at high levels of x than it is at low levels of x. a) I only. 3. If this economy is operating at point A, which of the following statements is TRUE? I. The opportunity cost of producing more x is zero. a) III only. The following TWO questions refer to the PPF diagram below. 4. What is the MARGINAL cost of producing good y? a) 1/4 of a unit of x. 5. What is the cost of producing FOUR units of good y? a) 16 units of x. 6. Consider a PPF drawn with x on the horizontal axis and y on the vertical axis. Which of the following concepts can be used to explain why this production possibility frontier could be flat at relatively lows levels of x and steep at relatively high levels of x? a) Increasing marginal costs. 7. Which of the following concepts can be used to explain why production possibility frontiers slope downwards. a) Scarcity Exercises 2.31. The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day. Which of the following statements in TRUE? a) Producer A has the comparative advantage in producing X. 2. Consider the PPF diagram drawn below, for two countries that are free to trade with one another. Which of the following production combinations is/are INEFFICIENT? I. Country 1 produces at point C and country 2 produces at point D. a) II only. 3. The diagram below illustrates the PPFs for two countries that produce wine and cheese. With no trade, country 1 produces at point A on its PPF and country 2 produces at point B. Assume that the two countries now begin to trade with one another. Which of the following will NOT occur (relative to the case with no trade). a) Country 1 will produce less cheese. 4. Which of the following statements about production and trade is FALSE? I. If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that good. The following THREE questions refer to the diagram below, which illustrates the PPFs for two countries who are free to trade. 5. What is the marginal opportunity cost (MC) of producing good x in each country? a) 2 units of good y in country 1 and 4 units of good y in country 2. 6. What is the marginal opportunity cost (MC) of producing good y in each country? a) 2 units of good x in country 1 and 4 units of good x in country 2. 7. Suppose that aggregate production of x across the two countries is equal to 100 (that is, country one’s production of x plus country two’s production of x equals 100 units). If these 100 units of x are being produced efficiently, then aggregate production of y will equal: a) 200 units of y. 8. The diagram below illustrates the identical PPFs of two countries. Initially, there is no trade allowed between the two countries, and each country produces at point A. If trade is opened up, which of the following will occur? I. Country 1 will export coal to country 2. a) I and II only. 9. The table below shows the maximum amounts of coffee and salmon that Brazil and British Colombia can produce if they just produce one good. Assuming constant marginal costs: a) Brazil has a comparative advantage in coffee
production 10. The diagram below illustrates the PPFs for two countries that produce two goods. The two countries are free to trade with one another. Which of the following production combinations are efficient? a) Country 1 is at point C; country 2 is at point D. Which of the following is true about comparative advantage?Which of the following is true of comparative advantage? The law of comparative advantage states that the individual with the lower opportunity cost of producing a particular output should specialize in that output.
Which of the following describes the comparative advantage?Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality.
What is comparative advantage your answer?What Is Comparative Advantage? A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else.
Which of the following statements is true concerning comparative advantage quizlet?Which of the following statements is true concerning comparative advantage? Poor nations typically have a comparative advantage in high-tech but not agricultural goods.
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