T.Y B.COM
SEMESTER - 5
INTERNATIONAL TRADE
(IT)
MCQs: OPPORTUNITY COST THEORY
1. Haberler explained his theory of international trade on the basis of:
(a) Marginal cost
(b) opportunity cost
(c) Labour cost
(d) accounting cost
2. When the cost conditions are increasing, then production possibility curve is
(a) straight line
(b) concave to origin
(c) Convex to origin
(d) none
3. The opportunity cost theory assumes that:
(a) Labour is the only factor of production
(b) The price or cost of a commodity can be inferred from its labour content
(c) Labour is homogeneous
(d) None of the above
4. With respect to a production possibilities curve, we can say that:
(a) A point inside or below it implies that the economy is either not utilizing fully all of its resources or not using the best technology available to it
(b) A point on it involves the full employment of the economy‘s resources and the
use of the best technology available
(c) A point above it cannot be reached with the resources and technology presently 3 to the nation
(d) All the above
5. With cloth measured along the horizontal axis and wheat along the vertical axis, the
absolute slope of the straight line production possibilities curve gives:
(a) The MRTcw
(b) The Pc / Pw
(c) Both the MRTcw and the Pc / Pw
(d) Neither the MRTcw nor the Pc / Pw
6. If a nation gains from trade, its consumption point is:
(a) On its production possibilities frontier
(b) Inside its production possibilities frontier
(c) Above its production possibilities frontier
(d) Any of the above
7. A straight line production possibilities curve refers to
(a) constant costs
(b) increasing costs
(c) decreasing costs
(d) any of the above
8. Increasing opportunity costs to produce more and more units of a commodity is given by a production possibilities curve that is
(a) Concave to the origin
(b) Convex to the origin
(c) A straight line
(d) Any of the above
9. The equal amounts of the commodity that a nation must give up in order to release just resources to produce each additional unit of another commodity represents
(a) decreasing opportunity cost
(b) constant opportunity costs
(c) increasing opportunity cost
(d) all of the above
10. The amount of one commodity that a nation must give up in order to get one more unit of a second commodity is called
(a) Marginal rate of transformation
(b) opportunity cost of a commodity
(c) both above
(d) none
11. When a nation has to give up increasing amounts of one commodity in order to
release just enough resources to produce each additional unit of another commodity, it is called as
(a) decreasing opportunity cost
(b) increasing opportunity cost
(c) decreasing return of condition
(d) b and c
12. Decreasing opportunity cost is shown by production possibility curve that is
(a) downward falling straight line
(b) convex to origin
(c) concave to origin
(d) all of the above
13. the amount of commodity that a nations is willing to give up to obtain additional
unit of other commodity and still getting equal level of satisfaction is known as
(a) marginal rate of transformation
(b) opportunity cost
(c) marginal rate of substitution
(d) none
14. A curve showing various combinations of two commodities that a nation can produce by fully utilizing all its resources is known as
(a) production frontier curve
(b) transformation curve
(c) production possibility curve
(d) all of the above
15. The slope of production possibility curve measures
(a) marginal rate of transformation
(b) opportunity cost
(c) marginal rate of substitution
(d) a and b
16. if the nation faces constant costs conditions or constant MRT, then its production
possibility curve is a
(a) downward falling straight line
(b) convex to origin
(c) concave to origin
(d) any of the above
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