Trade and Opportunity Costs
This passage and table describe the opportunity costs faced by two countries.
1 The countries of Grand Coast and Toland are trading partners. The two main goods
traded are timber and fish. Every year the ministers of trade from each country
attend an international conference to discuss issues related to foreign trade and
decide how each country should specialize. The table provides economic data for
one year.
In Grand Coast, what is the opportunity cost of one unit of fish?
- A. ½ unit of timber
- B. 5 units of timber
- C. 2 units of fish
- D. 8 units of fish
Correct Answer & Rationale
Correct Answer: A
Opportunity cost refers to the value of the next best alternative that is forgone when making a choice. In Grand Coast, if one unit of fish is produced, the opportunity cost is the amount of timber that could have been produced instead. Option A, ½ unit of timber, accurately reflects this trade-off, indicating that for each unit of fish, only half a unit of timber is sacrificed. Option B, 5 units of timber, overestimates the sacrifice, suggesting a much higher cost than what is actually incurred. Option C, 2 units of fish, misinterprets the concept, as it implies a cost in the same product rather than in timber. Option D, 8 units of fish, also incorrectly suggests a loss of the same good, failing to recognize the opportunity cost in terms of timber.
Opportunity cost refers to the value of the next best alternative that is forgone when making a choice. In Grand Coast, if one unit of fish is produced, the opportunity cost is the amount of timber that could have been produced instead. Option A, ½ unit of timber, accurately reflects this trade-off, indicating that for each unit of fish, only half a unit of timber is sacrificed. Option B, 5 units of timber, overestimates the sacrifice, suggesting a much higher cost than what is actually incurred. Option C, 2 units of fish, misinterprets the concept, as it implies a cost in the same product rather than in timber. Option D, 8 units of fish, also incorrectly suggests a loss of the same good, failing to recognize the opportunity cost in terms of timber.
Other Related Questions
After the Revolutionary War, the western border of the United States was the
- A. Mississippi River.
- B. Gulf of Mexico.
- C. Rocky Mountains.
- D. Great Lakes.
Correct Answer & Rationale
Correct Answer: A
The western border of the United States after the Revolutionary War was defined by the Mississippi River, which served as a natural boundary facilitating westward expansion. Option B, the Gulf of Mexico, is incorrect as it is located to the south, not marking the western border. Option C, the Rocky Mountains, is also inaccurate; while they are a significant geographical feature, they were not recognized as a border at that time. Option D, the Great Lakes, pertains to the northern boundary and does not represent the western limit. Thus, the Mississippi River accurately reflects the western boundary post-war.
The western border of the United States after the Revolutionary War was defined by the Mississippi River, which served as a natural boundary facilitating westward expansion. Option B, the Gulf of Mexico, is incorrect as it is located to the south, not marking the western border. Option C, the Rocky Mountains, is also inaccurate; while they are a significant geographical feature, they were not recognized as a border at that time. Option D, the Great Lakes, pertains to the northern boundary and does not represent the western limit. Thus, the Mississippi River accurately reflects the western boundary post-war.
The Bill of Rights is part of which document?
- A. The Magna Carta
- B. The Constitution
- C. The Articles of Confederation
- D. The Declaration of the Rights of Man
Correct Answer & Rationale
Correct Answer: B
The Bill of Rights, which comprises the first ten amendments, is embedded within the Constitution of the United States, ensuring individual liberties and limiting governmental power. Option A, the Magna Carta, is a historical document from 1215 that influenced constitutional law but is not directly related to the U.S. Bill of Rights. Option C, the Articles of Confederation, served as the first governing document of the U.S. but did not include a Bill of Rights. Option D, the Declaration of the Rights of Man, pertains to the French Revolution and outlines rights for French citizens, not American rights.
The Bill of Rights, which comprises the first ten amendments, is embedded within the Constitution of the United States, ensuring individual liberties and limiting governmental power. Option A, the Magna Carta, is a historical document from 1215 that influenced constitutional law but is not directly related to the U.S. Bill of Rights. Option C, the Articles of Confederation, served as the first governing document of the U.S. but did not include a Bill of Rights. Option D, the Declaration of the Rights of Man, pertains to the French Revolution and outlines rights for French citizens, not American rights.
When is a government most likely to establish a wage floor?
- A. When wages have consistently increased over a long period of time
- B. When wages have remained constant over a long period of time
- C. When it determines wages are too low
- D. When it determines wages are too high
Correct Answer & Rationale
Correct Answer: C
A wage floor, often implemented through minimum wage laws, is typically established when the government identifies that wages are too low, leading to insufficient income for workers. Option A is incorrect because a consistent increase in wages does not necessitate a wage floor; it may indicate a healthy economy. Option B is also wrong, as constant wages may not reflect a need for intervention unless they are deemed inadequate. Option D misinterprets the purpose of a wage floor; it is not set when wages are high, but rather to protect workers from unlivable pay levels. Thus, the rationale for a wage floor centers on addressing low wages.
A wage floor, often implemented through minimum wage laws, is typically established when the government identifies that wages are too low, leading to insufficient income for workers. Option A is incorrect because a consistent increase in wages does not necessitate a wage floor; it may indicate a healthy economy. Option B is also wrong, as constant wages may not reflect a need for intervention unless they are deemed inadequate. Option D misinterprets the purpose of a wage floor; it is not set when wages are high, but rather to protect workers from unlivable pay levels. Thus, the rationale for a wage floor centers on addressing low wages.
What is the most likely reason the St. Louis did not return to Hamburg?
- A. The start of World War II made it too dangerous to travel that far.
- B. Most of the passengers were originally from Belgium, not Germany.
- C. The ship did not have enough fuel after being at sea for so long.
- D. The passengers could have ended up being sent to concentration camps.
Correct Answer & Rationale
Correct Answer: D
The most compelling reason the St. Louis did not return to Hamburg is that the passengers faced the real threat of being sent to concentration camps. As the political climate in Europe shifted dramatically during this period, returning them to Germany would have put their lives in jeopardy. Option A, while recognizing the dangers of wartime travel, does not specifically address the immediate threat to the passengers' safety. Option B is inaccurate; the origin of most passengers does not influence the ship's decision to return. Option C is also incorrect; fuel levels would not have been a primary concern compared to the safety of the passengers.
The most compelling reason the St. Louis did not return to Hamburg is that the passengers faced the real threat of being sent to concentration camps. As the political climate in Europe shifted dramatically during this period, returning them to Germany would have put their lives in jeopardy. Option A, while recognizing the dangers of wartime travel, does not specifically address the immediate threat to the passengers' safety. Option B is inaccurate; the origin of most passengers does not influence the ship's decision to return. Option C is also incorrect; fuel levels would not have been a primary concern compared to the safety of the passengers.