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.
Which statement best describes a key aspect of the trade relationship between Grand Coast and Toland?
- A. Grand Coast has the advantage in both timber and fish.
- B. Toland has the comparative advantage in fish.
- C. Toland can produce timber at a lower opportunity cost than Grand Coast.
- D. Grand Coast can produce fish at a lower opportunity cost than Toland.
Correct Answer & Rationale
Correct Answer: D
In the context of trade relationships, opportunity cost is crucial. Grand Coast can produce fish at a lower opportunity cost than Toland, meaning it sacrifices less in terms of other goods when producing fish. This advantage allows Grand Coast to specialize in fish production, leading to more efficient trade. Option A is incorrect as it suggests Grand Coast has the advantage in both timber and fish, which is unlikely in a comparative advantage scenario. Option B misstates the comparative advantage, assigning it to Toland for fish, which contradicts the opportunity cost analysis. Option C incorrectly asserts that Toland has a lower opportunity cost for timber, which is not supported by the information provided.
In the context of trade relationships, opportunity cost is crucial. Grand Coast can produce fish at a lower opportunity cost than Toland, meaning it sacrifices less in terms of other goods when producing fish. This advantage allows Grand Coast to specialize in fish production, leading to more efficient trade. Option A is incorrect as it suggests Grand Coast has the advantage in both timber and fish, which is unlikely in a comparative advantage scenario. Option B misstates the comparative advantage, assigning it to Toland for fish, which contradicts the opportunity cost analysis. Option C incorrectly asserts that Toland has a lower opportunity cost for timber, which is not supported by the information provided.
Other Related Questions
The U.S. Supreme Court considered a case in which a political activist was jailed for stating publicly that World War I was a rich man's war but a poor man's fight. To which case is this case most similar?
- A. Commonwealth v. Hunt
- B. Muller v. Oregon
- C. Schenck v. United States
- D. Brown v. Board of Education
Correct Answer & Rationale
Correct Answer: C
The case involving the political activist parallels **Schenck v. United States** due to its focus on free speech during wartime. In Schenck, the Supreme Court upheld the conviction of an individual for distributing anti-draft leaflets, emphasizing that speech could be limited if it posed a "clear and present danger." **Commonwealth v. Hunt** pertains to labor unions and the legality of their activities, making it unrelated to free speech issues. **Muller v. Oregon** deals with labor laws and women's rights, not political expression. **Brown v. Board of Education** addresses racial segregation in schools, which diverges from the context of wartime speech and activism.
The case involving the political activist parallels **Schenck v. United States** due to its focus on free speech during wartime. In Schenck, the Supreme Court upheld the conviction of an individual for distributing anti-draft leaflets, emphasizing that speech could be limited if it posed a "clear and present danger." **Commonwealth v. Hunt** pertains to labor unions and the legality of their activities, making it unrelated to free speech issues. **Muller v. Oregon** deals with labor laws and women's rights, not political expression. **Brown v. Board of Education** addresses racial segregation in schools, which diverges from the context of wartime speech and activism.
Based on the obituary, what was Taylor's first job?
- A. Gang boss
- B. Scientist
- C. Engineer
- D. Manager
Correct Answer & Rationale
Correct Answer: A
Taylor's first job as a gang boss reflects an early involvement in leadership and organization, likely in a challenging environment. This position often requires strong management skills and the ability to coordinate team efforts, which can be foundational for future roles. Option B, scientist, is incorrect as it implies a formal education and specialized training that is not indicated in the obituary. Option C, engineer, suggests a technical background that does not align with the described early career path. Lastly, option D, manager, while related, does not capture the specific context of Taylor's initial role, which was more informal and associated with a gang structure.
Taylor's first job as a gang boss reflects an early involvement in leadership and organization, likely in a challenging environment. This position often requires strong management skills and the ability to coordinate team efforts, which can be foundational for future roles. Option B, scientist, is incorrect as it implies a formal education and specialized training that is not indicated in the obituary. Option C, engineer, suggests a technical background that does not align with the described early career path. Lastly, option D, manager, while related, does not capture the specific context of Taylor's initial role, which was more informal and associated with a gang structure.
Which point on this PPF graph represents a currently unobtainable output level for this economy?
- A. V
- B. X
- C. Y
- D. Z
Correct Answer & Rationale
Correct Answer: D
Point D represents a currently unobtainable output level for this economy because it lies outside the production possibilities frontier (PPF). The PPF illustrates the maximum efficient production of two goods, given the available resources and technology. Point A (V), Point B (X), and Point C (Y) are all located on or within the PPF, indicating feasible production levels that the economy can achieve. In contrast, Point D (Z) exceeds these capabilities, signifying an output level that cannot be realized with the current resources and technology. Thus, only Point D is unattainable.
Point D represents a currently unobtainable output level for this economy because it lies outside the production possibilities frontier (PPF). The PPF illustrates the maximum efficient production of two goods, given the available resources and technology. Point A (V), Point B (X), and Point C (Y) are all located on or within the PPF, indicating feasible production levels that the economy can achieve. In contrast, Point D (Z) exceeds these capabilities, signifying an output level that cannot be realized with the current resources and technology. Thus, only Point D is unattainable.
Before leaving Germany, where did most of the passengers intend to resettle?
- A. Cuba
- B. Great Britain
- C. France
- D. United States
Correct Answer & Rationale
Correct Answer: D
Most passengers intended to resettle in the United States due to its reputation as a land of opportunity and refuge for immigrants. The U.S. offered economic prospects and a chance for a fresh start, making it a primary destination for those leaving Germany. Option A, Cuba, was less appealing as it did not have the same level of immigration support or opportunities. Option B, Great Britain, while historically significant, was less favored due to its stringent immigration policies at the time. Option C, France, although attractive, did not match the U.S. in terms of the number of immigrants seeking a new life.
Most passengers intended to resettle in the United States due to its reputation as a land of opportunity and refuge for immigrants. The U.S. offered economic prospects and a chance for a fresh start, making it a primary destination for those leaving Germany. Option A, Cuba, was less appealing as it did not have the same level of immigration support or opportunities. Option B, Great Britain, while historically significant, was less favored due to its stringent immigration policies at the time. Option C, France, although attractive, did not match the U.S. in terms of the number of immigrants seeking a new life.