1Traders should specialize in the good that Select one a tha

1-Traders should specialize in the good: that:

Select one:

a. that they can produce with the lowest opportunity cost.

b. in which they have an absolute advantage.

c. in which their trading partner has a comparative advantage.

d. in which they do not have an absolute advantage.

2- The better a person is at producing one good:

Select one:

a. the worse he is at producing other goods.

b. the higher the opportunity cost to him of producing other goods.

c. the lower the incentive he has to trade with other people.

d. the better he is at producing other goods.

3- If instead of specialized doctors (neurologists, cardiologists, gastroenterologists, etc.) we had doctors who each knew the same things about all aspects of medicine, it would be:

Select one:

a. better because then we could just go to one doctor with no loss of quality in medical care.

b. better because total medical knowledge in society would increase.

c. worse because the human brain is limited.

d. worse because total medical knowledge in society would decrease.

4- Comparative advantage is determined by which of the following?

Select one:

a. efficiency

b. bargaining power

c. opportunity cost

d. productivity

5-The slope of the production possibilities frontier at a given point indicates ______.

Select one:

a. the preferences of a country.

b. a country\'s total gains from trade.

c. a country\'s opportunity cost of production.

d. a country\'s trade balance.

6- Which of the following is typically a result of the division of knowledge?

Select one:

a. The society runs with the knowledge of a few persons.

b. Each person has the same knowledge as everyone else.

c. Labor productivity is higher..

d. No one specializes in any activity.

7-The production possibilities frontier shows:

Select one:

a. the combinations of outputs a country can produce given its resources and productivity.

b. the combinations of inputs that a country has given its outputs and productivity.

c. the combinations of outputs and resources that a country possesses given its productivity.

d. the maximum level of a country\'s productivity given its resources and outputs.

8-Producers who have absolute advantages in all goods:

Select one:

a. cannot exist.

b. have no use for trade.

c. are better off specializing in their comparative advantages and trading for other goods.

d. should avoid the global division of labor because it is counterproductive for them.

9-The real cost of producing a good is:

Select one:

a. the dollar cost of inputs used to make the item.

b. the opportunity cost of producing the good.

c. the resources that were used to make the good.

d. the dollar amount it costs to sell the good.

Solution

1. a. that they can produce with the lowest opportunity cost.

The cost of an opportunity forgone or in other words the loss of the benefits that one could receive from that opportunity or you can say it is the most valuable forgone alternative.

2. b. the higher the opportunity cost to him of producing other goods.

4. c. opportunity cost

Comparative advantage is the capability to produce a certain good/service at a lower marginal and opportunity cost than its competitor or it is being the lowest relative opportunity cost for the producer of a particular good.