CLEP Microeconomics chapter practice4 questions

04 PPFs, Comparative Advantage, 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 4

An economy is producing fewer bicycles and radios than it could produce simultaneously with its current resources. On a PPF graph, its output combination is

Points inside the frontier are attainable but leave some resources unemployed or misallocated. Points on the frontier are productively efficient.
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B. inside the frontier and productively inefficient

Points inside the frontier are attainable but leave some resources unemployed or misallocated. Points on the frontier are productively efficient.

Question 2

Question 2 of 4

In one day, North can produce 12 tablets or 6 printers, while South can produce 8 tablets or 8 printers. Which statement is correct?

North gives up 6/12=0.5 printer per tablet, less than South's 1. South gives up 1 tablet per printer, less than North's 2.
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E. North has comparative advantage in tablets, and South has comparative advantage in printers.

North gives up 6/12=0.5 printer per tablet, less than South's 1. South gives up 1 tablet per printer, less than North's 2.

Question 3

Question 3 of 4

Country A's opportunity cost of one bushel of wheat is 2 yards of cloth. Country B's opportunity cost is 5 yards of cloth. Which trading price for one bushel of wheat can benefit both countries?

A mutually beneficial wheat price must lie between 2 and 5 yards of cloth. Three lies strictly inside that interval.
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B. 3 yards of cloth

A mutually beneficial wheat price must lie between 2 and 5 yards of cloth. Three lies strictly inside that interval.

Question 4

Question 4 of 4

A bowed-out production possibilities frontier most directly reflects

Resources are not equally productive in all uses. Moving more resources toward one good requires sacrificing increasingly valuable production of the other.
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C. rising opportunity cost as resources are reassigned

Resources are not equally productive in all uses. Moving more resources toward one good requires sacrificing increasingly valuable production of the other.

Quiz complete