WorksheetsPPC and Comparative Advantage
Total questions: 20
Worksheet time: 21mins
Which of the following is the most fundamental issue that economics addresses?
Choice of appropriate technology
Reduction of unemployment
Reduction of budget deficit
Promotion of privatization
Use of scarce resources
Which of the following best describes human capital?
The number of workers in the labor force
The physical capital used by workers
The financial assets owned by workers
The training and education of workers
The spending by business for worker recruitment
All societies face a trade-off for every decision for which of the following reasons?
A decision entails zero opportunity cost.
Resources are scarce.
Some resources are always unemployed.
Resources have no alternative uses.
Resources are not allocated efficiently.
The concept of opportunity cost would no longer be relevant if
poverty in an economy no longer existed
the supply of all resources were unlimited
resources were allocated efficiently
real wages were flexible
all current incomes were invested in technological research
Which of the following would shift a country’s production possibilities curve inward?
A reduction in the country’s inflation rate
A reduction in the country’s real interest rate
A reduction in the size of the country’s labor force
An increase in the typical retirement age in the country
An increase in the country’s cyclical unemployment rate
Which of the following would cause the production possibilities curve shown above to shift outward?
Reopening steel plants that had been closed
Rehiring laid-off steelworkers
Using machinery for missile production instead of steel production
Using machinery for steel production instead of missile production
Developing a more efficient steelmaking process
Which of the following is always true of an economy operating on its production possibilities frontier?
Its resources are fully employed.
It is allocatively efficient.
It cannot trade with other nations because it is the most efficient producer of tradeable goods.
It will necessarily operate on the same frontier the following year.
It must be a command economy.
Which of the following concepts can be illustrated using the production possibilities curve?
I. Choice
II. Scarcity
III. Price level
IV. Opportunity cost
II only
I and III only
III and IV only
I, II, and IV only
II, III, and IV only
When an economy producing two goods is operating efficiently and at full employment, increasing the production of one good will result in
an inward shift of the production possibilities curve
an outward shift of the production possibilities curve
a decrease in the amount of the other good that can be produced
an increase in the costs of both goods
an increase in the amount of resources available
which is not a factor of production
land
taxes
labor
capital
entrepreneur
Which statement best explains why nations must trade?
All nations belong to free trade agreements.
All nations seek out new production methods.
No nation has all necessary resources.
No nation can employ all of its laborers.
Countries will export goods and services that they can produce at lower costs. This is called —
capitalism
Comparative advantage
trade agreement
absolute advantage
Which of the following is NOT an effect of comparative advantage on international trade?
It makes efficient use of human resources.
Nations monitor the percentage of their urban population.
It influences the development of a variety of industries.
Nations produce goods and services they can sell for a profit.
Which country specializes in a primary economic activity?
Jamaica
Belgium
Chad
Liechtenstein
If two nations specialize according to the law of comparative advantage and then trade with each other, which of the following would be true?
A smaller number of goods would be available in each trading nation
Total world production of goods would decrease
Everyone within each nation would be better off
Each nation would increase its consumption possibilities
One nation would gain at the expense of the other nations
Before specialization and trade, the domestic opportunity cost of producing 1 ton of grain in Alpha and in Beta is which of the following?
Alpha: 1 ton of steel Beta: 1 ton of steel
Alpha: 1 ton of steel; Beta: 2 ton of steel
Alpha: 2 tons of steel; Beta: 1 ton of steel
Alpha: 1 ton of steel; Beta: 0.5 ton of steel
Alpha: 0.33 ton of steel; Beta: 1.5 tons of steels
The theory of comparative advantage implies that Alpha would find it advantageous to
Export grain and import steel
Export steel and import grain
Export both grain and steel and import nothing
Import both grain and steel and export nothing
Trade 1 ton of grain for 0.5 ton of steel
Which of the following is the basic economic concept that makes mutually beneficial trade possible?
Absolute advantage
Specialization
Trade-offs
Scarcity
Opportunity cost
The table shows that Home Nation can produce five autos and one hundred computers using all its resources in a year. Foreign Nation can produce five auto and fifty computers using all its resources a year. Based on the information provided, which of the following must be true?
Home Nation has an absolute advantage in the production of computers
Foreign Nation has an absolute advantage in the production of autos
Home Nation has a comparative advantage in the production of autos
Foreign Nation has a comparative advantage in the production of computers
Neither nation has a comparative advantage
The table shows the quantity of motorcycles and automobiles produced by two countries (X and Y) that use the same amount of resources
Country X has an absolute and comparative advantage in the production of motorcycles
Country x has an absolute and comparative advantage in the production of both goods
Neither country has a comparative advantage in the production of motorcycles
County Y has an absolute and comparative advantage in the production of automobiles
Country Y has an absolute and comparative advantage in the production of motorcycles
