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Multiple Choice Quiz
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1.
Specialization in production is _________ with ___________.
A)incomplete; constant costs
B)incomplete; increasing costs
C)variable; constant costs
D)complete; increasing costs
2.
China is relatively labor-abundant and Australia is relatively land-abundant. Production of textiles is 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.
3.
Bowed-out production possibilities curves indicate:
A)constant costs of production.
B)increasing costs of production.
4.
Flat production possibilities curves indicate:
A)constant costs of production.
B)increasing costs of production.
5.
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 curve touches the horizontal axis.
C)the origin.
D)the curve touches the highest indifference curve.
6.
Which of the following statements is true?
  1. International differences in the shapes of bowed-out production-possibility curves can occur because different products use the factors of production in different proportions.
  2. International differences in the shapes of bowed-out production-possibility curves can occur because countries differ in their relative factor endowments.
  3. International differences in the shapes of bowed-out production-possibility curves can occur because countries different in the shapes of their community indifference curves.
A)(1)
B)(1) + (2)
C)(1) + (2) + (3)
D)(1) + (3)
7.
Which of the following is not a factor of production?
A)land
B)money
C)labor
D)capital
8.
Product prices between two countries can differ with no trade because:
  1. The relative shapes of the production-possibility curves differ between the two countries.
  2. The relative shapes and positions of the community indifference curves differ between the two countries.
  3. There are increasing costs of production in one country and constant costs of production in the other country.
A)(1)
B)(1) + (2)
C)(1) + (2) + (3)
D)(2) + (3)
9.
England is relatively labor-abundant and the United States is relatively land abundant. Food production is relatively land-intensive and umbrella production is relatively labor-intensive. H-O theory predicts:
A)with increasing marginal costs of production, the United States can be expected to export umbrellas to England and import corn from England.
B)with constant marginal costs of production, the United States will produce only corn and export corn to England and England will export umbrellas to the United States.
C)with constant marginal costs of production, England will production only corn and export corn to the United States and the United States will export umbrellas to England.
D)with constant marginal costs of production, the United States will produce some corn and some umbrellas and export some corn to England.
10.
Which of the following individuals was a professor at the University of Stockholm, a member of the Swedish Riksdag, and a Nobel laureate?
A)David Ricardo
B)Eli Heckscher
C)John Maynard Keynes
D)Bertil Ohlin





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