Jamaica has a comparative advantage in the production of

Economics Topic 7

Question 1

If Shawn can produce donuts at a lower opportunity cost than Sue, then

A. Shawn has a comparative advantage in the production of donuts.

B. Sue has a comparative advantage in the production of donuts.

C. Shawn should not produce donuts.

Question 2

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

A. falls.

B. stays the same.

C. rises.

Question 3

Both Dave and Caroline produce sweaters and socks. If Dave’s opportunity cost of 1 sweater is 3 socks and Caroline’s opportunity cost of 1 sweater is 5 socks, then

A. Dave has a comparative advantage in the production of sweaters.

B. Caroline has a comparative advantage in the production of sweaters.

C. Dave has a comparative advantage in the production of socks.

D. Dave has a comparative advantage in the production of both sweaters and socks.

Question 4

Assume that Jamaica and Norway can switch between producing coolers and

producing radios at a constant rate. The following table shows the

number of coolers or number of radios each country can produce in one

day.

----------- One day output

----------- Coolers | Radios

--------------------------------

Jamaica | 12 '''''' | 6

Norway | 24 ''''' | 3

Complete the sentence: Jamaica has a comparative advantage in the production of

A. coolers and Norway has a comparative advantage in the production of radios.

B. radios and Norway has a comparative advantage in the production of coolers.

C. both goods and Norway has a comparative advantage in the production of neither good.

D. neither good and Norway has a comparative advantage in the production of both goods.

Question 5

By definition, imports are

A. people who work in foreign countries.

B. goods in which a country has an absolute advantage.

C. limits placed on the quantity of goods leaving a country.

D. goods produced abroad and sold domestically.

Question 6

A tariff is a tax on

A. savings.

B. capital goods.

C. imports.

D. land.

Question 7

Refer to Exhibit 34-6. Which of the following is true? http://i.imgur.com/tMn3SHt.png

A. Country A has a comparative advantage in both cheese and wine.

B. Country B has a comparative advantage in both cheese and wine.

C. Country A has a comparative advantage in cheese, and country B has a comparative advantage in wine.

D. Country B has a comparative advantage in cheese, and country A has a comparative advantage in wine.

Question 8

Over a given period of time, if imports are greater than exports, the result is

A. A trade war.

B. A trade deficit.

C. An embargo.

D. A trade surplus.