Week 13 Quiz

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). Which statement about absolute advantage is accurate?

Select one.

• Southland has the absolute advantage in wheat, and the two countries tie in cloth
• Northland has the absolute advantage in cloth, and Southland has it in wheat
• Southland has the absolute advantage in both wheat and cloth
• Northland has the absolute advantage in wheat, because its wheat costs it less cloth to make

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). What is Northland's opportunity cost of one cloth?

Select one.

• 0.5 wheat
• 2 wheat
• 3 wheat
• 4 wheat

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). What is Southland's opportunity cost of one wheat?

Select one.

• half of a cloth
• 3 cloth
• 1⁄3 of a cloth
• 2 cloth

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). Which assignment follows comparative advantage?

Select one.

• Southland makes both goods, because it is at least as productive at each
• Northland makes wheat, and Southland makes cloth
• Neither country should specialize, because they tie in cloth
• Northland makes cloth, and Southland makes wheat

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). Northland sells cloth and Southland buys it. Which terms of trade leave both countries better off than making both goods at home?

Select one.

• 2 wheat per cloth
• 2.5 wheat per cloth
• 3 wheat per cloth
• 6 wheat per cloth

Per worker-day, Northland makes 4 wheat or 2 cloth, and Southland makes 6 wheat or 2 cloth (the course's illustrative two-country model). Each country has 12 worker-days. After specializing, Northland makes 24 cloth and trades 14 cloth for wheat at 2.5 wheat per cloth. What does Northland have after the trade?

Select one.

• 35 wheat and 10 cloth
• 32 wheat and 8 cloth
• 35 wheat and 24 cloth
• 37 wheat and 14 cloth

In the course's illustrative two-country model, world output is 68 wheat and 20 cloth before trade and 72 wheat and 24 cloth after both countries specialize. What does that change show?

Select one.

• Northland gained exactly what Southland lost, so world output did not change at all
• Only Southland gained, because it has the absolute advantage in wheat
• Prices rose, so the larger numbers are nominal, not real
• World output rose by 4 wheat and 4 cloth from the same 24 worker-days

In the course's illustrative expenditure account, exports X = 100 and imports IM = 150, in billions of dollars. Which statement correctly reads the trade balance?

Select one.

• NX = +50 billion dollars: exports exceeded imports by 50 billion dollars
• NX = −50 billion dollars: the country lost 50 billion dollars of national income
• NX = −50 billion dollars: imports exceeded exports by 50 billion dollars
• NX = 250 billion dollars: the total value of the country's trade

A trade deficit, by itself, means a country lost national income.

True or false.

• True
• False

In the debate over tariffs and trade policy, which statement is normative?

Select one.

• Specialization by comparative advantage raises total output
• Protecting particular jobs, towns, or strategic industries is worth higher prices for everyone
• A tariff raises the price of the taxed import at home
• A barrier that stops all trade between two countries lowers world output back to its before-trade level