Mircroeconmics MC Questions h8

Question1. To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.a. Trueb. False 2. If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.a. Trueb. False 3. Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost.a. Trueb. False 4. Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.a. Trueb. False 5. Trade decisions are based on the principle of absolute advantage.a. Trueb. False 6. According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.a. Trueb. False 7. A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.a. Trueb. False 8. When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.a. Trueb. False 9. William and Jamal live in the country of Dumexia. When Dumexia legalized international trade in bananas, the price of bananas in Dumexia increased. As a result, William became better off and Jamal became worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.a. Trueb. False 10. Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.a. Trueb. False 11. People who provide you with goods and servicesa. are acting out of generosity.b. do so because they get something in return.c. have chosen not to become interdependent.d. are required to do so by the government. 12. Which of the following is not a reason people choose to depend on others for goods and services?a. to improve their livesb. to allow them to enjoy a greater variety of goods and servicesc. to consume more of each good without working any more hoursd. to allow people to produce outside their production possibilities frontiers 13.

Alice and Betty's Production Possibilities in one 8-hour day.

If Alice produces only lemonade, she can produce

a. 200 pitchers per day.b. 300 pitchers per day.c. 400 pitchers per day.d. 450 pitchers per day. 14. Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 chair isa. 1/5 table for Mike and 1/3 table for Sandy.b. 1/5 table for Mike and 3 tables for Sandy.c. 5 tables for Mike and 1/3 table for Sandy.d. 5 tables for Mike and 3 tables for Sandy. 15. For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals toa. have a comparative advantage in both activities.b. have an absolute advantage in both activities.c. be more productive per unit of time in both activities.d. gain from trade with each other. 16. If labor in Mexico is less productive than labor in the United States in all areas of production,a. then neither nation can benefit from trade.b. then Mexico can benefit from trade but the United States cannot.c. then the United States will have a comparative advantage relative to Mexico in the production of all goods.d. then both Mexico and the United States still can benefit from trade. 17.

Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.

The opportunity cost of 1 toaster for Miguel is

a. ½ mixer.b. 2 hours of labor.c. 2 mixers.d. 20 hours of labor. 18.

Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.

England should export

a. cheese and import bread.b. bread and import cheese.c. both goods and import neither good.d. neither good and import both goods. 19. The price of sugar that prevails in international markets is called thea. export price of sugar.b. import price of sugar.c. comparative-advantage price of sugar.d. world price of sugar. 20. For any country, if the world price of zinc is higher than the domestic price of zinc without trade, that country shoulda. export zinc, since that country has a comparative advantage in zinc.b. import zinc, since that country has a comparative advantage in zinc.c. neither export nor import zinc, since that country cannot gain from trade.d. neither export nor import zinc, since that country already produces zinc at a low cost compared to other countries. 21. Suppose Haiti has an absolute advantage over other countries in producing oranges, but other countries have a comparative advantage over Haiti in producing oranges. If trade in oranges is allowed, Haitia. will import oranges.b. will export oranges.c. will either export oranges or import oranges, but it is not clear from the given information.d. would have nothing to gain either from exporting or importing oranges. 22. When a country allows trade and becomes an importer of a good,a. everyone in the country benefits.b. the gains of the winners exceed the losses of the losers.c. the losses of the losers exceed the gains of the winners.d. everyone in the country loses. 23.

If this country allows free trade in wagons,

a. consumers will gain more than producers will lose.b. producers will gain more than consumers will lose.c. producers and consumers will both gain equally.d. producers and consumers will both lose equally. 24.

Producer surplus in this market before trade is

a. A.b. A + B.c. B + C + D.d. C. 25.

With trade allowed, this country

a. exports 200 units of the good.b. exports 400 units of the good.c. imports 200 units of the good.d. exports 800 units of the good. 26.

The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.

The tariff

a. decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.b. decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F.c. increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.d. increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F. 27. The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is nowa. higher in the steel market, lower in the rice market, and unchanged in the TV market.b. higher in the rice and steel markets, and unchanged in the TV market.c. lower in the rice and TV markets, and higher in the steel market.d. lower in the rice and steel markets, and the same in the TV market. 28. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good,a. consumer surplus increases and total surplus increases in the market for that good.b. consumer surplus increases and total surplus decreases in the market for that good.c. consumer surplus decreases and total surplus increases in the market for that good.d. consumer surplus decreases and total surplus decreases in the market for that good. 29. When a country allows trade and becomes an importer of a good,a. domestic producers become better off, and domestic consumers become worse off.b. domestic producers become worse off, and domestic consumers become better off.c. domestic consumers become better off, but the effect on the well-being of domestic producers is ambiguous.d. domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous. 30. One should be especially wary of the national-security argument for restricting trade when that argument is made bya. representatives of industry.b. representatives of the defense establishment.c. members of households.d. foreign government officials.