Exam 3: Interdependence and the Gains From Trade

Tom Brady should pay someone else to mow his lawn instead of mowing it himself,unless

Adam Smith asserted that a person should never attempt to make at home

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 spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of meat for 2 pounds of potatoes,then

Table 3-1 Assume that John and Jane can switch between producing bread and wine at a constant rate. -Refer to Table 3-1.Assume that John and Jane each work 24 hours.What happens to total production if instead of each person spending 12 hours producing each good,Jane spends 21 hours producing wine and 3 hours producing bread and John spends 3 hours producing wine and 21 hours producing bread?

Figure 3-1 Argentina’s Production Possibilities Frontier Peru’s Production Possibilities Frontier -Refer to Figure 3-1.If Argentina and Peru each divides its time equally between producing corn and fish,then total production is

By definition,imports are

David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.

Two individuals engage in the same two productive activities.In which of the following circumstances would neither individual have a comparative advantage in either activity?

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.Give a range of prices in terms of pounds of rice per pound of broccoli at which the two countries would be both be willing to trade.

Figure 3-8 Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier -Refer to Figure 3-8.Chile's opportunity cost of one pound of soybeans is

Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year,and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year.There are 20 workers in Agland and 10 workers in Zenland.Currently the two countries do not trade.Agland produces and consumes 100 units of grain and 20 units of incense per year.Zenland produces and consumes 50 units of grain and no incense per year.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

Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds)that the nation of Bonovia could produce in a given month. -Refer to Figure 3-11.In the nation of Cropitia,the opportunity cost of a pound of ham is 0.3 pounds of cheese.Bonovia and Cropitia both can gain from trading with one another if one pound of ham trades for

Figure 3-8 Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier -Refer to Figure 3-8.At which of the following prices would both Chile and Colombia gain from trade with each other?

Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds)that the nation of Bonovia could produce in a given month. -Assume for the United States that the opportunity cost of each airplane is 100 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

Table 3-16 Summary of the Gains from Trade -Refer to Table 3-16.The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade.What are Alice and Betty's gains from specialization and trade?

Consider two individuals - Howard and Mai - each of whom would like to wear sweaters and eat tasty food.The gains from trade between Howard and Mai are least obvious in which of the following cases?

Table 3-18 Chris and Tony's Production Opportunities -Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce.The table shows their possible production per month if both work the same number of 8 hour days.If Chris and Tony both decide to specialize and produce only the good in which they have a comparative advantage,then

Suppose Hank and Tony can both produce corn.If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans,then Hank has the comparative advantage in the production of corn.

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 a comparative advantage producing rice? Defend your answer using the numbers given.

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.Maya should specialize in the production of