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- 1. Multiple Choice
Production possibilities frontier in the standard theory of international trade represent ____
the supply of commodity X and Y in the absence of trade under increasing cost
the demand of commodity X and Y in the absence of trade under increasing cost
Community satisfaction in one country
None of above
- 2. Multiple Choice
The production possibility frontier is concave from the origin because of ____
decreasing opportunity cost
Increasing opportunity cost
constant opportunity cost
No opportunity cost
- 3. Multiple Choice
The marginal rate of transformation is used to calculate the ____
amount of Y that nation must add up to produce each additional unit of X
amount of Y that nation must give up to produce each additional unit of X
consumption of Y that nation must give up for one extra unit of X
consumption of Y that nation must add up for one extra unit of X
- 4. Multiple Choice
The marginal rate of substitution is the _____
consumption of Y that nation must give up for one extra unit of X
consumption of Y that nation must add up for one extra unit of X
amount of Y that nation must give up to produce each additional unit of X
amount of Y that nation must add up to produce each additional unit of X
- 5. Multiple Choice
Identify reason(s) for concave production possibility frontier
Resources are not homogeneous
Resources are used in the same fixed proportion
Resources are homogeneous
Resources are not used in the same proportion
- 6. Multiple Choice
Movement down the PPF curve indicates that the opportunity cost of more capital goods is producing more consumer goods
True
False
- 7. Multiple Choice
Equilibrium in isolation is the condition of ____
Trade with another country involve
nation reach incomplete specialization
Nation is in equilibrium when it reaches the highest indifference curve possible given its production frontier
Community satisfaction decrease at the point of incomplete specialization
- 8. Multiple Choice
An autarky point is know as ____
when nation 1 and nation 2 trade among them
an absence of trade
lead to incomplete specialization
none of above
- 9. Multiple Choice
Nation 1 and Nation 2 end up consuming commodity X and Y at point E because of _____
economies of scale
the gains from trade with increasing costs
product differentiation
None of above
- 10. Multiple Choice
incomplete specialization under increasing costs is that as each nation specializes in the production of the commodity of its comparative advantage but still produce in a small amount of its comparative disadvantage
True
False
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