1. Two countries, A and B, trade freely with each other. Country A exports cars to country B and imports gasoline from c

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1 Two Countries A And B Trade Freely With Each Other Country A Exports Cars To Country B And Imports Gasoline From C 1 (224.58 KiB) Viewed 61 times

1. Two countries, A and B, trade freely with each other. Country A exports cars to country B and imports gasoline from country B. Country B exports gasoline to country A and imports cars from country A. From this information, we conclude that (a) Country A has an absolute advantage in car production and country B has an absolute advantage in gasoline production. (b) Country B has an absolute advantage in car production and country A has an absolute advantage in gasoline production. (c) Country A has an absolute advantage in car production and in gasoline production. (d) Country B has an absolute advantage in car production and in gasoline production. (e) None of the above. 2. Country A can produce at most 400 cars and at most 2000 gallons of gasoline. Its opportunity cost of producing gasoline is (a) 5. (b) 5 cars. (c) 1/5 gallons/car. (d) 1/5 cars/gallon. (e) 5 cars/gallon. 3. A month ago, Jerry purchased a ticket at a price of $70 to a Grateful Dead concert that will take place tonight. If Jerry wanted to, he could now resell that ticket for $120. If Jerry does not attend the concert then he will earn $400 by working. What is Jerry's opportunity cost of attending the concert? (a) $400. (b) $520. (c) $470. (d) $590. (e) None of the above.