Economics 0011A/B Lecture Notes - Lecture 6: Board Foot, Absolute Advantage, Yokohama Rubber Company

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Published on 2 Aug 2020
Department
Professor
ECO101H1: Principles of Microeconomics Prof. Freitas, University of Toronto
Topic: Gains from Trade
Multiple Choice Practice Questions and Solutions
Use the following to answer questions 1-2:
1. Use Table: The Production Possibilities for Cars and Leather Boots. Given the opportunity costs of production:
A) there is no basis for trade.
B) Mexico should specialize in boots.
C) Canada should specialize in cars.
D) Canada should specialize in both goods, and Mexico should not produce either good.
2. Use Table: The Production Possibilities for Cars and Leather Boots. The opportunity cost of producing one
car in Mexico is:
A) 500 pairs of leather boots.
B) 1 000 pairs of leather boots.
C) different from the opportunity cost in Canada.
D) 2 000 pairs of leather boots, which is the same as in Canada.
Use the following to answer questions 3-6:
3. Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____
in Canada as (than) in Mexico.
A) petroleum; less
B) petroleum; more
C) petroleum; the same
D) machinery; the same
4. Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____
in Canada as (than) in Mexico.
A) machinery; more
B) machinery; the same
C) machinery; less
D) petroleum; less
F2019 1 MC Gains from Trade
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ECO101H1: Principles of Microeconomics Prof. Freitas, University of Toronto
5. Use Table: Production Possibilities for Machinery and Petroleum. In Canada, the opportunity cost of produc-
ing 40 units of machinery is _____ units of petroleum.
A) 80
B) 60
C) 40
D) 20
6. Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing
10 units of machinery is _____ units of petroleum.
A) 30
B) 90
C) 180
D) 270
Use the following to answer questions 7-10:
7. Use Table: Production Possibilities for the United States and Canada. Both nations can produce cars and
lumber. In _____, the opportunity cost of _____ cars is _____ board feet of lumber.
A) the United States; 1 million; 10 million
B) the United States; 10 million; 1 million
C) Canada; 1 million; 6 million
D) Canada; 1 million; 166 000
8. Use Table: Production Possibilities for the United States and Canada. Both nations can produce cars and
lumber. If these nations trade, Canada has the comparative advantage in _____ and should trade _____
to the United States in exchange for _____.
A) cars; cars; lumber
B) lumber; lumber; cars
C) lumber; cars; lumber
D) cars; lumber; cars
9. Use Table: Production Possibilities for the United States and Canada. Both nations can produce cars and
lumber. If these nations were to specialize and trade, the United States would benefit from trade by exporting
1 million cars to Canada in exchange for _____ million board feet of lumber.
A) 2
B) 0.5
C) 0.7
D) 1
F2019 2 MC Gains from Trade
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