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5. What is the highest price Country B is willing to pay to 7. There are opportunities for mutually beneficial trade
buy wheat from Country A? between two countries whenever
a. ⁄2 unit of textiles a. one can produce more of everything than the other.
1
2
b. ⁄3 unit of textiles b. the production possibilities curves of the two
c. 1 unit of textiles countries are identical.
1
d. 1 ⁄2 units of textiles c. each country has a comparative advantage in making
e. 2 units of textiles something.
d. the countries are similar in size.
6. What are the mutually beneficial terms of trade, e. no country has an absolute advantage in producing
measured in units of wheat from Country A per unit of both goods.
textiles from Country B?
a. between 1 and 2
2
b. between ⁄3 and 2
1 1
c. between ⁄2 and 1 ⁄2
2 1
d. between ⁄3 and 1 ⁄2
1
e. between ⁄2 and 2
®
Tackle the AP Test: Free-Response Questions

1. Refer to the graph below to answer the following 1 point: Because Country A can produce corn at a lower
questions.
opportunity cost (¼ computer versus 1¼ computers).
Quantity of 1 point: Corn
corn (bushels) 1 point: Country B has a comparative advantage in the
800 production of computers, so it will produce computers
Country A’s PPC
and import corn (Country A has a comparative advantage
in corn production, so it will specialize in corn and import
computers from Country B).
400
Country B’s PPC 1 point: ¼ computer
1 point: Country A’s opportunity cost of producing corn is
¼ computer, so that is the lowest price it will accept to sell
corn to Country B.
0 200 500 Quantity of computers 1 point: 1¼ computers
a. What is the opportunity cost of a bushel of corn in
each country? 2. Refer to the table below to answer the following
b. Which country has an absolute advantage in questions. These two countries are producing textiles
computer production? Explain. and wheat using equal amounts of resources. The table
c. Which country has a comparative advantage in corn indicates the maximum weekly output for workers who
production? Explain. produce wheat or textiles.
d. If each country specializes, what good will Country B
import? Explain. Weekly output per worker
e. What is the minimum price Country A will accept to Country A Country B
export corn to Country B? Explain. Bushels of wheat 15 10
f. What is the maximum price Country B will pay to Units of textiles 60 60
import corn from Country A?
a. What is the opportunity cost of producing a bushel
of wheat for each country?
Rubric for FRQ 1 (10 points)
b. Which country has the absolute advantage in wheat
1 point: Country A, ¼ computer; Country B, 1¼ computers production?
1 point: Country B c. Which country has the comparative advantage in
1 point: Because Country B can produce more computers textile production? Explain. (5 points)
than Country A (500 versus 200).
1 point: Country A

26 Macro • Unit 1 Basic Economic Concepts
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