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Econ 2100 Exam 2 Questions and Correct
Answers
If a nation has an absolute advantage in the production of a good
Ans: It can produce that good using fewer resources than its
trading partner
If a nation has a comparative advantage in the production of a
good Ans: it can produce that good at a lower opportunity cost
than its trading partner
Which of the following statements about trade is true? Ans: Trade
can benefit everyone in society because it allows people to
specialize in activities in which they have a comparative advantage
According to the principle of comparative advantage Ans:
countries should specialize in the production of goods for which
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they have a lower opportunity cost of production than their
trading partners
Which of the following statements is true? Ans: A self- sufficient
country, at best, consumer on its production possibilities frontier
Suppose a country's workers can produce 4 watches per hour or
12 rings per hours. If there is no trade, Ans: the domestic price of
1 ring is 1/3 of a watch
Suppose a country's workers can produce 4 watches per hour or
12 rings per hour. If there is no trade, Ans: the opportunity cost of
1 watch is 3 rings
Which of the following statements about absolute advantage is
true Ans: Australia has an absolute advantage in the production of
both food and electronics
the opportunity cost of 1 unit of electronics in Australia is Ans: 4
units of food
© 2025 All rights reserved
Econ 2100 Exam 2 Questions and Correct
Answers
If a nation has an absolute advantage in the production of a good
Ans: It can produce that good using fewer resources than its
trading partner
If a nation has a comparative advantage in the production of a
good Ans: it can produce that good at a lower opportunity cost
than its trading partner
Which of the following statements about trade is true? Ans: Trade
can benefit everyone in society because it allows people to
specialize in activities in which they have a comparative advantage
According to the principle of comparative advantage Ans:
countries should specialize in the production of goods for which
© 2025 All rights reserved
, 2 | Page
they have a lower opportunity cost of production than their
trading partners
Which of the following statements is true? Ans: A self- sufficient
country, at best, consumer on its production possibilities frontier
Suppose a country's workers can produce 4 watches per hour or
12 rings per hours. If there is no trade, Ans: the domestic price of
1 ring is 1/3 of a watch
Suppose a country's workers can produce 4 watches per hour or
12 rings per hour. If there is no trade, Ans: the opportunity cost of
1 watch is 3 rings
Which of the following statements about absolute advantage is
true Ans: Australia has an absolute advantage in the production of
both food and electronics
the opportunity cost of 1 unit of electronics in Australia is Ans: 4
units of food
© 2025 All rights reserved
