AP Macroeconomics chapter practice15 questions

04 Comparative Advantage, Specialization, and Trade

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 15

Country X can produce 12 units of wheat or 6 units of cloth per day; Country Y can produce 8 units of either. How should the two countries specialize?

Wheat costs Country X (6)/(12)=(1)/(2) unit of cloth and costs Country Y a full unit, so X grows the wheat. The cloth costs reverse: 2 wheat for X against 1 for Y. A gives each country the good it produces at the higher cost. B mistakes Country Y's one-for-one tradeoff for efficiency in both goods, C compares total wheat with total cloth instead of comparing the two producers, and E treats an absolute advantage in one good as a reason to stay self-sufficient.
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D. Country X in wheat, Country Y in cloth.

Wheat costs Country X (6)/(12)=(1)/(2) unit of cloth and costs Country Y a full unit, so X grows the wheat. The cloth costs reverse: 2 wheat for X against 1 for Y. A gives each country the good it produces at the higher cost. B mistakes Country Y's one-for-one tradeoff for efficiency in both goods, C compares total wheat with total cloth instead of comparing the two producers, and E treats an absolute advantage in one good as a reason to stay self-sufficient.

Question 2

Question 2 of 15

A country can hold a comparative advantage even when its partner produces more of both goods. Which of the following determines where that advantage lies?

Comparative advantage ranks producers by what each gives up, not by how much each can make. A and C restate absolute advantage: a bigger labor force or a frontier lying farther out raises what a country can produce without touching the rate at which one good trades for the other at home. D reverses cause and effect, since the terms of trade follow from a cost gap rather than create it. E treats a past trade pattern as the source of that gap.
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B. Each country's opportunity cost in the two goods

Comparative advantage ranks producers by what each gives up, not by how much each can make. A and C restate absolute advantage: a bigger labor force or a frontier lying farther out raises what a country can produce without touching the rate at which one good trades for the other at home. D reverses cause and effect, since the terms of trade follow from a cost gap rather than create it. E treats a past trade pattern as the source of that gap.

Question 3

Question 3 of 15

Country R gives up 2 units of corn per unit of steel produced, and Country S gives up 5. Measured in corn per unit of steel, a trading rate benefits both countries only if it

Country R parts with steel only for more corn than the 2 it sacrifices at home, and Country S buys steel only for less than the 5 that producing it would cost. Any rate between the two clears both hurdles. B leaves Country R worse off than growing corn itself, and C leaves Country S worse off than building its own steel. D and E land on a domestic cost, where that country is exactly indifferent and gains nothing.
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A. lies between 2 and 5

Country R parts with steel only for more corn than the 2 it sacrifices at home, and Country S buys steel only for less than the 5 that producing it would cost. Any rate between the two clears both hurdles. B leaves Country R worse off than growing corn itself, and C leaves Country S worse off than building its own steel. D and E land on a domestic cost, where that country is exactly indifferent and gains nothing.

Question 4

Question 4 of 15

Each week Country X can produce 30 drones or 10 scanners, and Country Y can produce 16 drones or 8 scanners. Comparative advantage points to

A scanner costs Country X 3 drones and costs Country Y only 2, so Y builds the scanners; the drone costs are (1)/(3) scanner for X against (1)/(2) for Y, so X builds the drones. A assigns each country the good it makes at the higher cost. B and D both stop at Country X's absolute lead, one turning it into production of everything and the other into a reason not to trade. C compares drones with scanners inside each country rather than across the two.
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E. Country X in drones and Country Y in scanners

A scanner costs Country X 3 drones and costs Country Y only 2, so Y builds the scanners; the drone costs are (1)/(3) scanner for X against (1)/(2) for Y, so X builds the drones. A assigns each country the good it makes at the higher cost. B and D both stop at Country X's absolute lead, one turning it into production of everything and the other into a reason not to trade. C compares drones with scanners inside each country rather than across the two.

Question 5

Question 5 of 15

Country M can produce 24 bags of coffee or 12 boxes of cocoa; Country N can produce 18 of either. What price per box of cocoa leaves both countries better off?

Cocoa costs Country M 2 bags of coffee and costs Country N only 1, so N exports cocoa and M imports it at any price strictly between 1 and 2 bags. A pays Country N less than growing the cocoa costs it, and E charges Country M more than growing its own would. B and D sit exactly on a domestic cost, leaving one country indifferent rather than better off.
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C. 1.5 bags of coffee

Cocoa costs Country M 2 bags of coffee and costs Country N only 1, so N exports cocoa and M imports it at any price strictly between 1 and 2 bags. A pays Country N less than growing the cocoa costs it, and E charges Country M more than growing its own would. B and D sit exactly on a domestic cost, leaving one country indifferent rather than better off.

Question 6

Question 6 of 15

In Country H a car takes 12 labor-hours and a bus 18; in Country J a car takes 10 hours and a bus 20. Which of the following specialization patterns follows comparative advantage?

Turn the hours into a ratio. A car costs Country H (12)/(18)=(2)/(3) of a bus and costs Country J (10)/(20)=(1)/(2), so J builds cars and H builds buses. B inverts that ranking and hands each country the vehicle it makes at the higher cost. C and E each read one country's faster build time as an advantage in both goods, which two cost ratios can never deliver. D compares the two 30-hour totals, and equal totals reveal nothing about relative cost.
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A. Country J in cars, Country H in buses.

Turn the hours into a ratio. A car costs Country H (12)/(18)=(2)/(3) of a bus and costs Country J (10)/(20)=(1)/(2), so J builds cars and H builds buses. B inverts that ranking and hands each country the vehicle it makes at the higher cost. C and E each read one country's faster build time as an advantage in both goods, which two cost ratios can never deliver. D compares the two 30-hour totals, and equal totals reveal nothing about relative cost.

Question 7

Question 7 of 15

Country R needs 4 labor-hours for a basket of fish and 8 for a bolt of cloth; Country S needs 6 hours for fish and 9 for cloth. In Country S, one basket of fish costs

Opportunity cost is the ratio of the two labor requirements. Freeing the 6 hours a basket of fish takes buys (6)/(9)=(2)/(3) of a bolt, since a bolt takes 9 hours. A quotes Country R's ratio, (4)/(8), and D quotes Country R's ratio upside down. C inverts Country S's own ratio, answering instead what a bolt of cloth costs in fish, and E reports a raw hour requirement as though hours were bolts.
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B. (2)/(3) bolt of cloth

Opportunity cost is the ratio of the two labor requirements. Freeing the 6 hours a basket of fish takes buys (6)/(9)=(2)/(3) of a bolt, since a bolt takes 9 hours. A quotes Country R's ratio, (4)/(8), and D quotes Country R's ratio upside down. C inverts Country S's own ratio, answering instead what a bolt of cloth costs in fish, and E reports a raw hour requirement as though hours were bolts.

Question 8

Question 8 of 15

Country X can produce 20 units of wheat or 10 units of cloth, and Country Y can produce 6 of either. Which of the following separates absolute from comparative advantage?

Country X makes more wheat and more cloth, so both absolute advantages are hers. The costs point elsewhere: wheat costs X (10)/(20)=(1)/(2) unit of cloth against a full unit for Y, while cloth costs X 2 wheat against Y's 1, so the comparative advantages split. A and B collapse the two ideas from opposite ends, one giving Country X everything and the other leaving Country Y nothing. C misreads the output figures, since Country X outproduces Y in cloth as well, and E treats a smaller maximum as evidence of a lower cost.
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D. Country X leads absolutely in both, but by cost only in wheat.

Country X makes more wheat and more cloth, so both absolute advantages are hers. The costs point elsewhere: wheat costs X (10)/(20)=(1)/(2) unit of cloth against a full unit for Y, while cloth costs X 2 wheat against Y's 1, so the comparative advantages split. A and B collapse the two ideas from opposite ends, one giving Country X everything and the other leaving Country Y nothing. C misreads the output figures, since Country X outproduces Y in cloth as well, and E treats a smaller maximum as evidence of a lower cost.

Question 9

Question 9 of 15

A laptop costs Country X 4 tablets of forgone output and costs Country Y 6 tablets. If Country X exports laptops to Country Y, both gain at

Country X parts with a laptop only for more than the 4 tablets it forgoes, and Country Y buys only for less than the 6 a laptop would cost it to build, so the rate has to sit inside that band. A falls below what Country X will accept, and E exceeds what Country Y would pay rather than produce its own. B and D fall on an endpoint, where one country trades at exactly its own cost and gains nothing.
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C. 5 tablets per laptop

Country X parts with a laptop only for more than the 4 tablets it forgoes, and Country Y buys only for less than the 6 a laptop would cost it to build, so the rate has to sit inside that band. A falls below what Country X will accept, and E exceeds what Country Y would pay rather than produce its own. B and D fall on an endpoint, where one country trades at exactly its own cost and gains nothing.

Question 10

Question 10 of 15

Country X gives up 2 loaves of bread to make a gallon of juice, and Country Y gives up 4. If Country X sells a gallon for 3 loaves, their combined gain on that gallon is

Country X gives up 2 loaves to make the gallon and receives 3, a gain of 1 loaf. Country Y pays 3 for a gallon that would have cost it 4 to make, also a gain of 1. The two gains sum to 2 loaves. A treats the exchange as zero-sum, B counts only one side of it, D mistakes the trading rate for the gain, and E adds the two domestic costs instead of measuring each against the rate.
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C. 2 loaves

Country X gives up 2 loaves to make the gallon and receives 3, a gain of 1 loaf. Country Y pays 3 for a gallon that would have cost it 4 to make, also a gain of 1. The two gains sum to 2 loaves. A treats the exchange as zero-sum, B counts only one side of it, D mistakes the trading rate for the gain, and E adds the two domestic costs instead of measuring each against the rate.

Question 11

Question 11 of 15

After specializing and trading, a country consumes a combination lying outside its own production possibilities frontier. Which of the following conclusions is justified?

Trade breaks the link between what a country produces and what it consumes. Production still lies on or inside the frontier; the exports it yields are exchanged for a bundle the country could not have made alone. B moves that unreachable bundle back into production, where it stays unreachable. C and D reach for a change in resources or an end to scarcity, though neither the country's technology nor its endowment moved. E adds a requirement trade does not impose, since a country with no absolute advantage still gains.
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A. Trade widened consumption possibilities while production stayed on the frontier.

Trade breaks the link between what a country produces and what it consumes. Production still lies on or inside the frontier; the exports it yields are exchanged for a bundle the country could not have made alone. B moves that unreachable bundle back into production, where it stays unreachable. C and D reach for a change in resources or an end to scarcity, though neither the country's technology nor its endowment moved. E adds a requirement trade does not impose, since a country with no absolute advantage still gains.

Question 12

Question 12 of 15

Two countries with straight-line production possibilities frontiers trade at a rate between their opportunity costs. Compared with self-sufficiency, specialization will

Moving resources toward the good each country makes at the lower cost raises the total of both goods, and a rate between the two domestic costs lets each side obtain the other good for less than home production would cost. A confuses closing an industry with losing output, and B denies that reallocation creates anything. C makes a real gain hinge on a monetary arrangement, and E reinstates the absolute-advantage requirement that comparative advantage was formulated to replace.
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D. raise the combined output available to the two countries

Moving resources toward the good each country makes at the lower cost raises the total of both goods, and a rate between the two domestic costs lets each side obtain the other good for less than home production would cost. A confuses closing an industry with losing output, and B denies that reallocation creates anything. C makes a real gain hinge on a monetary arrangement, and E reinstates the absolute-advantage requirement that comparative advantage was formulated to replace.

Question 13

Question 13 of 15

In Country P one bicycle costs 3 kayaks, and in Country Q one bicycle costs 2 kayaks. What follows about comparative advantage?

A kayak costs Country P (1)/(3) of a bicycle and costs Country Q (1)/(2), so kayaks go to P; bicycles cost 2 kayaks in Q against 3 in P, so bicycles go to Q. A reads a higher cost as an advantage. C carries Country Q's advantage in bicycles across to kayaks, where the ranking reverses, and D awards Q both, which two cost ratios can never do. E has it backwards: with no output totals given, these figures show comparative advantage and nothing else.
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B. Country P specializes in kayaks and Country Q in bicycles.

A kayak costs Country P (1)/(3) of a bicycle and costs Country Q (1)/(2), so kayaks go to P; bicycles cost 2 kayaks in Q against 3 in P, so bicycles go to Q. A reads a higher cost as an advantage. C carries Country Q's advantage in bicycles across to kayaks, where the ranking reverses, and D awards Q both, which two cost ratios can never do. E has it backwards: with no output totals given, these figures show comparative advantage and nothing else.

Question 14

Question 14 of 15

Country W exports a good to Country Z at a rate exactly equal to Country Z's own opportunity cost of producing it. Which of the following describes the outcome?

Paying exactly what home production would have cost leaves Country Z no better off, so the trade cannot improve both positions at once, whatever Country W earns on it. A treats a boundary rate as the most favorable one available. B denies the exporter any gain as a matter of principle, and C swaps the countries, assigning the indifference to Country W. D puts mutually beneficial rates outside the band between the two domestic costs, when the gains lie strictly inside it.
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E. Country Z is indifferent, so no mutual gain arises.

Paying exactly what home production would have cost leaves Country Z no better off, so the trade cannot improve both positions at once, whatever Country W earns on it. A treats a boundary rate as the most favorable one available. B denies the exporter any gain as a matter of principle, and C swaps the countries, assigning the indifference to Country W. D puts mutually beneficial rates outside the band between the two domestic costs, when the gains lie strictly inside it.

Question 15

Question 15 of 15

Which of the following is a genuine limitation of the comparative-advantage model rather than a rejection of its logic?

The model predicts a larger total output. It says nothing about who collects the gains or who absorbs the cost of moving between industries, and that silence is a real limit rather than a flaw in the reasoning. A restores the absolute-advantage requirement the model was built to discard, and B contradicts the consumption gain trade delivers. C treats a tariff as suspending opportunity cost rather than changing the price traders face, and D describes an endpoint rate, at which one country gains nothing.
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E. Aggregate gains do not guarantee that every worker or region benefits.

The model predicts a larger total output. It says nothing about who collects the gains or who absorbs the cost of moving between industries, and that silence is a real limit rather than a flaw in the reasoning. A restores the absolute-advantage requirement the model was built to discard, and B contradicts the consumption gain trade delivers. C treats a tariff as suspending opportunity cost rather than changing the price traders face, and D describes an endpoint rate, at which one country gains nothing.

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