Exam 3: Interdependence and the Gains From Trade

If it takes Canadian workers fewer hours to produce every good than it takes French workers, Canada cannot gain from trade with France.

-Refer to Table 3-2. What does each producer have a comparative advantage in?

If there is trade, which of the following is most likely?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3. Suppose Ben and Jerry were both producing at point A on their production possibilities frontier and then Ben decided he would be willing to trade 4 kg of cones to get 2 kg of ice cream from Jerry. If both decided to specialize in what they had a comparative advantage in and trade, what would be the gains from trade?

What is David Ricardo's contribution?

-Refer to Table 3-5. If Japan and Canada open up trade based on the principle of comparative advantage, who loses in the short term in Canada?

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, at what price would the two countries trade?

Figure 3-1 -Refer to Figure 3-1. Assume that both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they were the only producers of corn and wheat, what would the total production of wheat and corn be?

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what could Japan gain from exporting a car?

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Trade allows a country to consume outside its production possibilities frontier.

Makena and Renee work for a home cleaning company and they form a team. In each room, there are two broad cleaning areas: floor and windows. Makena can do a floor in 40 minutes and windows in 25 minutes. Renee does floors in 30 minutes and windows in 30 minutes. a. How long does it take to clean an apartment with 4 rooms if Makena takes 2 rooms and Renee takes 2 rooms, assuming that if one finishes earlier she takes a break waiting for the other? b. Later on, they decide that if one finishes earlier she would help the other to finish so that they can move on to another client. How long does it take now to finish? c. After a while, they realize that it is better if one does the floors in all rooms and the other does the windows. How long does it take now?

Egypt has a comparative advantage in the production of linen and an absolute advantage in the production of beer, compared to Russia. If these two countries decide to trade, what would the pattern of trade be?

Suppose a producer can produce shirts with lower opportunity cost than jeans. What else do we need to know if we want to determine this producer's comparative advantage?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5. What is the opportunity cost of one pair of ballet slippers for Ginger?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5. What is the opportunity cost of one pair of tap shoes for Ginger?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5. What should Fred and Ginger produce?

-Refer to Table 3-6. If Denmark and Italy specialize and trade according to their respective comparative advantage, who gains in the short run in Denmark?

-Refer to Table 3-3. What is the opportunity cost of one sweater for Courtney?

-Refer to Table 3-5. How could Canada and Japan both benefit?