Question

11.) England and Scotland can both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. (Draw a diagram of the two production possibilities frontiers in the space below if that would help you to answer the following questions.) a.) Which country has a lower opportunity cost in producing sweaters? (England/Scotland) (2 points) b.) Which country has a comparative advantage in producing sweaters? (England/Scotland) (2 points) c.) Which country will export sweaters, if trade is allowed? (England/Scotland) (2 points)

12. ) True or False? A nation will typically export goods in which it has a comparative advantage and import goods in which has a comparative disadvantage. (1 point) 13.) True or False? “When people in two countries have different opportunity costs of producing the same two goods, then each group of people can benefit from specializing in production and trading with one another.” (1 point)

14.) True or False? According to Prof. Hambley, trade is not a “zero-sum game” in which one participant wins but the other loses. Instead, trade is “win-win” situation for both participants. (2 points)

15.) True or False? “If a certain trade is good for one person, it can’t be good for the other one.” (2 points)

16.) True or False? According to the Law of Demand, holding “other things” constant, an increase in the price of a good will cause the quantity of that good demanded to fall. (2 points)

17.) True or False? The Law of Demand is true both for an individual’s demand for a particular good, and for the market demand. (2 points)

18.) A movement along a demand curve in response to a change in price is called a (change in demand; change in quantity demanded), while a shift in an entire demand curve to the left or right is called a (change in demand; change in quantity demanded). (2 points; 1 point each)

19.) Which of the following events would increase market demand and shift the market demand curve to the right? (Circle the letters of the correct answers.) (6 points) a.) the number of buyers increases b.) tastes change and each buyer wants to buy more of the good than before c.) the income of buyers increases, and the good is a normal good d.) the price of a substitute good increases e.) the price of a complementary good increases f.) buyers suddenly expect the good’s price will be higher in the future

20.) True or False? According to the Law of Supply, an increase in the price of good will usually result in an increase in the quantity of that good supplied. (2 points)

Answer 1