1.

Answer the next question(s) on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities A B C D E Pork (tons) 4 3 2 1 0 Beans (tons) 0 5 10 15 20 Trombonia's production possibilities A B C D E Pork (tons) 8 6 4 2 0 Beans (tons) 0 6 12 18 24 R-1 REF37017 The above data indicate that production in: A. both Latalia and Trombonia is subject to constant opportunity costs. B. Trombonia is subject to decreasing costs, but production in Latalia occurs under increasing opportunity costs. C. Latalia is subject to increasing costs, but production in Trombonia occurs under constant opportunity costs. D. both Latalia and Trombonia are subject to the law of increasing opportunity costs.

2.

Answer the next question(s) on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities A B C D E Pork (tons) 4 3 2 1 0 Beans (tons) 0 5 10 15 20 Trombonia's production possibilities A B C D E Pork (tons) 8 6 4 2 0 Beans (tons) 0 6 12 18 24 R-1 REF37017 Refer to the above tables. In Latalia the domestic real cost of 1 ton of pork: A. is 3 tons of beans. B. diminishes with the level of pork production. C. is 5 tons of beans. D. is *P 1/*B 5 of a ton of beans. E. increases with the level of pork production.

3.

Answer the next question(s) on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities A B C D E Pork (tons) 4 3 2 1 0 Beans (tons) 0 5 10 15 20 Trombonia's production possibilities A B C D E Pork (tons) 8 6 4 2 0 Beans (tons) 0 6 12 18 24 R-1 REF37017 Refer to the above tables. If these two nations specialize on the basis of comparative advantage: A. Trombonia will produce beans and Latalia will produce pork. B. Trombonia will produce both beans and pork. C. Latalia will produce both beans and pork and Trombonia will produce neither. D. Latalia will produce beans and Trombonia will produce pork.

4.

Answer the next question(s) on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities A B C D E Pork (tons) 4 3 2 1 0 Beans (tons) 0 5 10 15 20 Trombonia's production possibilities A B C D E Pork (tons) 8 6 4 2 0 Beans (tons) 0 6 12 18 24 R-1 REF37017 Refer to the above tables. Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely in accordance with comparative advantage, the total gains from specialization and trade will be: A. 4 tons of beans. B. 1 ton of pork and 2 tons of beans. C. 4 tons of pork. D. 2 tons of pork and 4 tons of beans.

5.

In the theory of comparative advantage, a good should be produced in that nation where: A. the production possibilities line lies further to the right than the trading possibilities line. B. its cost is least in terms of alternative goods which might otherwise be produced. C. its absolute cost in terms of real resources used is least. D. its absolute money cost of production is least.

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