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WorksheetsTopic 1: Fundamentals
Total questions: 4
Worksheet time: 5mins
Which of the following influence the terms of trade?
A) Different opportunity costs of the countries involved
B) The resource market
C) The goods and Services market
D) The wealth of a country
A government decides to spend more on defense and cannot spend money on a new airport. Which concepts can be applied to the above statement?
A) A budget surplus; external cost
B) factor of production; private monopoly
C) public sector; opportunity cost
D) trade surplus; budget deficit
A deposit of shale oil is discovered in an area of farming. The following estimates are made for a ten-year period.
● If the land is used only for farming it would yield income after tax of $10 billion.
● If the land is used only for shale oil extraction it would yield income after tax of $40 billion.
● The government would receive $5 billion in taxes from farming and $10 billion in taxes from shale oil extraction. What is the opportunity cost of using the land only for farming?
A) $25 billion
B) $30 billion
C) $35 billion
D) $45 billion
Suppose that Estonia and Bulgaria have the outputs for trombones and snowshoes shown in the table to the left.
Which of the following statements is correct?
A) Estonia has a comparative advantage in snowshoes.
B) Estonia has a comparative advantage in trombones.
C) Bulgaria has an absolute advantage in trombones.
D) Bulgaria has a comparative advantage in trombones.
