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Section $1$: Multiple choice $(6$ marks$)$

Instruction: circle the letter that corresponds to the correct answer to each question.

Which of the following is false"

a$.$ Two countries can gain from trade when their opportunity costs of production differ

b$.$ One country has a comparative advantage over another If it can produce a good at a lower opportunity cost than the other

c$.$ The basic principles for specialization and trade that apply to countries also apply to cities

d$.$ A country that has more resources than another country has a comparative advantage in the production of both goods

The gains that results from specialization and trade increases when

a$.$ Tariffs and quotas are enacted

b$.$ Exchange costs increase

c$.$ Transaction costs rise

d$.$ Artificial barriers to trade decrease

Use the table below to answer questions $3$ to $4.$

$\backslash$table$[[,$Guyana,Brazil$],[$Pencils$,20,10],[$Pens$,40,30]]$

The table above shows the number of pencils or pens that could be produced by Guya and Brazil in an hour. This table shows that

a$.$ Guyana has an absolute advantage over Brazil in the production of both pencils and pens

b$.$ Brazil has an absolute advantage over Guyana in the production of both pencils and pens

c$.$ Guyana has a comparative advantage over Brazilin the production of both pencils and pens

d$.$ Brazil has a comparative advantage over Guyana in the production of both pencils and pens

Guyana's opportunity cost of producing pens is

a$.2$

b$.\frac{1}{2}$

c$.3$

d$.0\mathrm{.}33$

$2$

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