Econ 201, Douglas
Fall 2005
QUIZ 2
PLEDGE: I have neither given nor received unauthorized help on this quiz.
SIGNED_______________________PRINT NAME CLEARLY_________________________
__ 1. Comparative advantage is based on
a. capital costs.
b. labor costs.
c. opportunity costs.
d. dollar price.
Labor Hours needed to make one unit of:
Nancy
Roger
__ 2.
a.
b.
c.
d.
Perfume
3
5
Cloth
9
10
Refer to the table shown. The opportunity cost of 1 yard of cloth for Nancy is
3 bottles of perfume.
1/3 bottle of perfume.
3/5 bottle of perfume.
9/10 bottle of perfume.
__ 3. Nancy has an absolute advantage in _________ and Roger has an absolute advantage in _________.
a. neither good, both goods
b. cloth, perfume
c. perfume, cloth
d. both goods, neither good
__ 4. Nancy has comparative advantage in ______ and Roger has comparative advantage in ________.
a. cloth, perfume
b. neither good, both goods
c. both goods, neither good
d. perfume, cloth
__ 5. Nancy & Roger both could benefit from trade if Nancy specializes in ___ and Roger specializes in
__.
a. perfume, cloth
b. cloth, perfume
c. perfume, perfume
d. cloth, cloth
__ 6. Nancy and Roger both would benefit if they trade ____ bottles of perfume per yard of cloth.
a. 1
b. 4
c. 2.5
d. 3.14159
__ 7. If labor in Mexico is cheaper than U.S. labor in all areas of production,
a. neither nation can benefit from trade.
b. Mexico can benefit from trade but the U.S. cannot.
c. Mexico will not have a comparative advantage in any good.
d. both nations can benefit from trade.
Econ 201, Douglas
ANSWERS:
1) C
2) A
3) D
4) D
5) A
6) C
7) D
Fall 2005