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Multiple Choice Quiz
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1

Mercantilists believed
A)That trade can only benefit a country at the expense ofanother country.
B)That maintaining a balance of tradedeficit was best.
C)Government should have no control overtrade.
D)Amassing large quantities of gold and silver weredamaging to the health of a country.
2

Specialization in production is _______ with _______.
A)incomplete; constant costs
B)incomplete; increasingcosts
C)variable; constant costs
D)complete; increasingcosts
3

Labor Required to make:In the U.S.In the R.O.W.

1 television

8 hours

4 hours

1 computer

3 hours

3 hours


Referring to the table above, the opportunity cost of one television in the U.S. is:
A)8/3 computer.
B)3/8 computer.
C)4/3 computer.
D)3/4 computer.
4

Referring to the table above, the opportunity cost of one computer in the U.S. is:
A)8/3 television.
B)3/8 television.
C)4/3 television.
D)3/4 television.
5

Referring to the table above, the opportunity cost of one television in the rest of the world is:
A)8/3 computer.
B)3/8 computer.
C)4/3 computer.
D)3/4 computer.
6

Referring to the table above, the opportunity cost of one computer in the rest of the world is:
A)8/3 computer.
B)3/8 computer.
C)4/3 computer.
D)3/4 computer.
7

Referring to the table above, the rest of the world has a comparative advantage in:
A)televisions.
B)computers.
8

Referring to the table above, the U.S has a comparative advantage in:
A)televisions.
B)computers.
9

Referring to the table above, which country has an absolute advantage in televisions?
A)U.S.
B)Rest of the World
10

Referring to the table above, neither country has an absolute advantage in ___________?
A)computers
B)televisions
11

China is relatively labor-abundant and Australia isrelatively land-abundant. Textiles are relatively more labor-intensive than the production of wool. According to Heckscher-Ohlin (H-O) theory, Australia will have:
A)a comparative advantage in textiles.
B)an absolute advantage in textiles.
C)a comparative advantage in wool.
D)an absolute advantage in wool.
12

Bowed-out production possibilities curves indicate:
A)constant costs of production.
B)increasing costs of production.
13

Flat production possibilties curves indicate:
A)constant costs of production.
B)increasing costs of production.
14

The best no-trade point for a country on an increasing cost production possibilities curve is where:
A)the curve touches the vertical axis.
B)the curvetouches the horizontal axis.
C)the origin.
D)the curve touches the highest indifference curve.





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