Exam 3: Interdependence and the Gains From Trade

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan's opportunity cost of one car is

Scenario 3.2.Countries A and B. In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli. -Refer to Scenario 3.2.Which country,if either,has an absolute advantage producing rice? Defend your answer.

Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts.If the US exports semiconductors to Mexico and imports auto parts from Mexico,

Figure 3-1 Panel (a). Panel (b). -Refer to Figure 3-1.The rate of tradeoff between producing chairs and producing couches is constant in

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea.If we were to do this,measuring airplanes along the horizontal axis,then

Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier -Refer to Figure 3-5.Hosne has an absolute advantage in the production of

Figure 3-2 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. -Refer to figure 3-2.Betty has

Figure 3-3 Arturo’s Production Possibilities FrontierFrontier Dina’s Production Possibilities -Refer to Figure 3-3.Arturo should specialize in the production of

Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour.The opportunity cost to Henry of making a bird house is 1/3 bird feeder.

Figure 3-6 Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities Frontier -Refer to Figure 3-6.Daisy has an absolute advantage in the production of

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars.Also assume that Germany has an absolute advantage in both fish and cars.If these two countries specialize and trade so as to maximize the benefits of specialization and trade,then

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day,and a worker in Felinia can produce either 5 blankets or 1 meal per day.Each nation has 10 workers.For many years,the two countries traded,each completely specializing according to their respective comparative advantages.Now war has broken out between them and all trade has stopped.Without trade,Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day.The war has caused the combined daily output of the two countries to decline by

For both parties to gain from trade,the price at which they trade must lie between the two opportunity costs.

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Which of the following combinations of coolers and radios could Aruba produce in one 40-hour week?

If a person chooses self-sufficiency,then she can only consume what she produces.

Interdependence among individuals and interdependence among nations are both based on the gains from trade.

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. Alice’s Production Possibilities Frontier Betty’s Production Possibilities Frontier -Refer to Figure 3-10.Which of the following prices would result in an mutually advantageous trade for Alice and Betty?

Trade between countries

Which of the following would not result from all countries specializing according to the principle of comparative advantage?