Micro Seminar

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.

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

• benefit both Hieu and Ha.
• benefit Ha, but not Hieu.
• benefit Hieu, but not Ha.
• benefit neither Hieu nor Ha.

A production possibilities frontier is bowed outward when

• the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good.
• an economy is self-sufficient instead of interdependent and engaged in trade.
• the rate of tradeoff between the two goods being produced is constant.
• the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.

The following table contains some production possibilities for an economy for a given month. If the production possibilities frontier is bowed outward, then “?” could be

• 100.
• 150.
• 200.
• 250.

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 the opportunity cost of one bushel of corn is 3/5 bushel of green beans, then the opportunity cost of 1 bushel of green beans is

• 3/5 bushel of corn.
• 5/3 bushels of corn.
• 3 bushels of corn.
• 5 bushels of corn.

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 is

• 1/5 table for Mike and 1/3 table for Sandy.
• 1/5 table for Mike and 3 tables for Sandy.
• 5 tables for Mike and 1/3 tables for Sandy.
• 5 tables for Mike and 3 tables for Sandy.

Absolute advantage is found by comparing different producers’

• opportunity costs.
• payments to land, labor, and capital.
• input requirements per unit of output.
• locational and logistical circumstances.

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that

• Mike has an absolute advantage in chairs.
• Mike has a comparative advantage in tables.
• Sandy has an absolute advantage in chairs.
• Sandy has a comparative advantage in chairs.

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?

• Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks.
• Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks.
• Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats.
• Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.