Exam 3: Interdependence and the Gains From Trade

To produce 100 bushels of wheat,Farmer A requires fewer inputs than does Farmer B.We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Table 3-4 -Refer to Table 3-4.At which of the following prices,if any,could both Denmark and Finland gain from trade?

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese,then England will consume

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year,and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year.There are 30 workers in each country.No trade occurs between the two countries.Boatland produces and consumes 75 units of wheat and 375 units of fish per year while Farmland produces and consumes 375 units of wheat and 75 units of fish per year.If trade were to occur,Boatland would trade 90 units of fish to Farmland in exchange for 80 units of wheat.If Boatland now completely specializes in fish production,how many units of fish could it now consume along with the 80 units of imported wheat?

Table 3-17 US and French Production Opportunities -Refer to Table 3-17 France has an absolute advantage in the production of

A production possibilities frontier is a straight line when

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.Without trade,Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes.As a result,Japan gained

Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-4.Assume that the farmer and the rancher each has 24 labor hours available.If each person divides his time equally between the production of meat and potatoes,then total production is

Table 3-12 -Refer to Table 3-1.Relative to the rancher,the farmer has

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3.Suppose Zimbabwe decides to increase its production of toothbrushes by 10.What is the opportunity cost of this decision?

Figure 3-6 Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities Frontier -Refer to Figure 3-6.If Daisy must work 2.5 hours to make each pie,then her production possibilities frontier is based on how many hours of work?

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.If the two countries do not trade,Cornland will produce and consume 400 bushels of corn and 100 bushels of oats,while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats.If each country made the decision to specialize in producing the good in which it has a comparative advantage,then the combined yearly output of the two countries would increase by

Country A and country B both produce shirts and shorts.Country B has an absolute advantage producing both shirts and shorts.Is there any condition under which the two countries could gain from trade?

Table 3-6 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-6.The opportunity cost of 1 mixer for Maya is

Scenario 3-1.Ice cream and cake. The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. -Refer to Scenario 3-1.Which if any good(s)does Greg have an absolute advantage producing?

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.Assume that Japan and Korea each has 2400 hours available.If each country spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 cars for 6 airplanes,then

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 broccoli? Defend your answer.

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.Suppose that trade is then initiated between the two countries,and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat.Freedonia will now be able to consume a maximum of

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3.Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to

If Shawn can produce more donuts in one day than Sue can produce in one day,then