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WorksheetsTerms of Trade
Total questions: 6
Worksheet time: 9mins
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
The table above shows the daily production possibilities for China and Malaysia in producing trucks and coffee using the same amount of resources. Based on the data provided, which of the following terms of trade are mutually beneficial for the two countries?
1 ton of coffee for 3 trucks
1 ton of coffee for 4 trucks
1 ton of coffee for 5 trucks
1 truck for 1 ton of coffee
1 truck for 5 tons of coffee
For an economy with a straight-line production possibilities curve, which of the following must be true?
I. The opportunity cost of producing other units is constant
II. Resources are completely adaptable to alternative uses
III. Resources are used efficiently
I only
II only
III only
I and II
II and III
For the production possibilities above, the opportunity cost of moving from combination "D" to combination "C" is
1 hat
2 hats
10 shoes
15 shoes
3 hats
The economy of Fisherland is at full employment for which year in the above diagram?
2009
2010
2013
2015
2017
2015 FRQ #2: Country X and Country Y are trading partners, and both produce furnaces and solar panels. The countries can produce the following amounts using equal amounts or resources.
Country X: 6 furnaces or 8 solar panels
Country Y: 6 furnaces or 12 solar panels
(a): Which country has an absolute advantage in producing solar panels?
(b): Calculate the opportunity cost of a furnace in Country Y.
(c): Which country has the comparative advantage in producing furnaces? Explain.
(d): If the terms of trade were that 2 furnaces are exchanged for 1 solar panel, should Country X produce solar panels domestically or import solar panels from Country Y?
