Assume that there are two countries, Home

Subject: Economics / General Economics
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Test: Quiz 1
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QUESTION 1 1 points Assume that there are two countries, Home and Foreign, and only two goods. Let Saved and denote the unit labour requirement for producing good i in Home and Foreign
respectively. Which of the following best describes the situation in which Foreign has an
absolute advantage in producing good 1?
a.
b.
c.
d.

QUESTION 2 1 points Saved Let us define the real wage as the purchasing power of one hour of labor. In the Ricardian 2X2
model, if two countries under autarky engage in trade then
a. the real wage will fall under pressure of international competition.
b. the real wage will increase in one country only if it decreases in the other.
c. the real wage will rise in both countries.
d. the real wage will increase only if a country attains full specialization.

QUESTION 3 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Product 2 will not be produced if:
a. b. c. d.

QUESTION 4 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
four di?erent products (A, B, C and D) in two di?erent countries (1 and 2).
Country 1
Country 2 Product A
1
5 Product B
2
6 Product C
3
7 Product D
4
8 If wages in Country 2 are 80% of the wages in Country 1, then:
a. Country 1 should produce Product A and Product B only
b. Country 1 should produce Product A only
c. Country 1 should produce Product A, Product B and Product C only
d. Country 1 should produce Product A, Product B, Product C and Product D

QUESTION 5 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Under free trade, a country may not specialise in production if:
a. b. c. d.

QUESTION 6 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Which of the following statements is most correct?
a. Home has both a comparative advantage and an absolute advantage in producing good
1
b. Foreign has a comparative advantage in producing good 1 and an absolute advantage in
producing good 2
c. Foreign has both a comparative advantage and an absolute advantage in producing
good 1
d. Home has a comparative advantage in producing good 2 and an absolute advantage in
producing good 1

QUESTION 7 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
four di?erent products (A, B, C and D) in two di?erent countries (1 and 2).
Country 1 Product A
5 Product B
6 Product C
7 Product D
8 Country 2 1 2 3 4 If wages in Country 1 and Country 2 are equal, then:
a. Country 2 should produce Product A, Product B, Product C and Product D
b. Country 2 should produce Product A and Product B only
c. Country 2 should produce Product A, Product B and Product C only
d. Country 2 should produce Product A only

QUESTION 8 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Product 1 may not be produced if:
a. b. c. d.

QUESTION 9 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by:
free trade equilibrium price for good i. The free trade equilibrium price ra2o is given by:
a. .
. Let denote the b. c. d.

QUESTION 10 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Product 1 will not be produced if:
a. b. c. d.

QUESTION 11 1 points Assume that there are two countries, Home and Foreign, and only two goods. Let
denote the unit labour requirement for producing good i in Home and Foreign Saved and denote the free trade equilibrium price for good i. respectively. Let Which of the following best describes the situation in which Home has a comparative
advantage in producing good 1?
a. b. c. d.

QUESTION 12 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
four di?erent products (A, B, C and D) in two di?erent countries (1 and 2).
Country 1
Country 2 Product A
1
5 Product B
2
6 Product C
3
7 Product D
4
8 If wages in Country 2 are 40% of the wages in Country 1, then:
a. Country 2 should produce Product A and Product B only
b. Country 2 should produce Product D only
c. Country 2 should produce Product A only
d. Country 2 should produce Product C and Product D only

QUESTION 13 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
two di?erent products (A and B) in two di?erent countries (1 and 2).
Country 1
Country 2
According to the table, Product A
2
4 Product B
3
1 a. Country 1 has an absolute advantage in producing Product A and Product B
a)b. Country 2 has a comparative advantage in producing Product B
c. Country 1 has a comparative advantage in producing Product B
d. Country 2 has an absolute advantage in producing Product A and Product B

QUESTION 14 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
four di?erent products (A, B, C and D) in two di?erent countries (1 and 2).
Country 1
Country 2 Product A
1
5 Product B
2
6 Product C
3
7 Product D
4
8 If wages in Country 1 are 4 times higher than wages in Country 2, then:
a. Country 1 should produce Product A only
b. Country 1 should produce Product A and Product B only
c. Country 1 should produce Product A, Product B, Product C and Product D
d. Country 1 should produce Product A, Product B and Product C only

QUESTION 15 1 points Saved Assume that labor is the only factor of production and that wages in the United States equal
$20 per hour while wages in Japan are $10 per hour. Production costs would be lower in the
United States as compared to Japan if
a. U.S. labor productivity equaled 40 units per hour and Japan’s 15 units per hour.
b. U.S. labor productivity equaled 15 units per hour and Japan’s 25 units per hour.
c. U.S. labor productivity equaled 15 units per hour and Japan’s 40 units per hour.
d. U.S. labour productivity equaled 30 units per hour and Japan’s 20 units per hour.

QUESTION 16 1 points Saved In a two country and two product Ricardian model, a small country is likely to benefit more
from trade than a large country because
a. the small country can raise wages.
b. the small country is more likely to fully specialize.
c. the small country is less likely to fully specialize.
d. the small country is less likely to trade at prices equal or close to its autarkic (domestic)
relative prices.

QUESTION 17 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Product 2 will not be produced if:
a. b. c. d.

QUESTION 18 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
two di?erent products (A and B) in two di?erent countries (1 and 2).
Country 1
Country 2 Product A
3
1 Product B
4
2 According to the table,
a)a. Country 2 has an absolute advantage in producing Product A and Product B
b. Country 2 has a comparative advantage in producing Product B
c. Country 1 has a comparative advantage producing in Product A and Product B
d. Country 1 has a comparative advantage in producing Product A

QUESTION 19 1 points Saved The table below shows the number of hours of labour required to produce one unit of output of
two di?erent products (A and B) in two di?erent countries (1 and 2). Product A
4
2 Country 1
Country 2 Product B
1
3 According to the table,
a)a. Country 2 has an absolute advantage in producing Product A
b. Country 1 has an absolute advantage in producing Product A
c. Country 2 has a comparative advantage in producing Product B
d. Country 1 has a comparative advantage in producing Product A

QUESTION 20 1 points Saved Assume that there are two countries, Home and Foreign, and two goods, 1 and 2. Home and
Foreign quantities are denoted by the superscripts “H” and “F” respectively. Labour is the only
factor of production. Home’s production possibility frontier is given by:
Foreign’s production possibility frontier is given by: .
. Let denote the free trade equilibrium price for good i.
Product 1 will not be produced if:
a. b. c. d. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Close Window Save and Submit