Interdependence and Trade Quiz

When can two countries gain from trading two goods?

• when the first country can only produce the first good and the second country can only produce the second good

• when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost

• when the first country is better at producing both goods and the second country is worse at producing both goods

• Two countries could gain from trading two goods under all of the above conditions.

Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, but Regan is better at producing both goods. In this case, trade could

• benefit both Jayson and Regan.

• benefit Jayson, but not Regan.

• benefit Regan, but not Jayson.

• benefit neither Jayson nor Regan.

Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

• Ben cannot knit sweaters and Shawna cannot bake bread.

• Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters.

• Ben is better than Shawna at baking bread and at knitting sweaters.

• Both Ben and Shawna can benefit from trade in all of the above cases.

The production possibilities frontier illustrates

• the combinations of output that an economy should produce.

• the combinations of output that an economy should consume.

• the combinations of output that an economy can produce.

• All of the above are correct.

An economy's production possibilities frontier is also its consumption possibilities frontier

• under all circumstances.

• under no circumstances.

• when the economy is self-sufficient.

• when the rate of tradeoff between the two goods being produced is constant.

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

• neither person faces trade-offs.

• the frontiers are straight lines.

• the frontiers are bowed out.

• they choose not to trade with one another.

For a self-sufficient producer, the production possibilities frontier

• is the same as the consumption possibilities frontier.

• is greater than the consumption possibilities frontier.

• is less than the consumption possibilities frontier.

• is always a straight line.

Assume for the United States that the opportunity cost of each airplane is 100 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

• (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars)

• (200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars)

• (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)

• (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

• Korea should specialize in the product in which it has an absolute advantage.

• it would be impossible for Korea to have an absolute advantage over another country in both products.

• it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods.

• Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

• 0.36 bushel of corn.

• 2.8 bushels of corn.

• 14 bushels of corn.

• 70 bushels of corn.