Question 1

Which of the following is not correct?

Accepted Answer

A)  Economists are generally united in their support of free trade. 
B)  The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time. 
C)  David Ricardo argued that Britain should not restrict imports of grain. 
D)  Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage. 
A)  Economists are generally united in their support of free trade. 
B)  The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time. 
C)  David Ricardo argued that Britain should not restrict imports of grain. 
D)  Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage.

Question 2

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 cheese is 1.5 pounds of ham.Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for

Accepted Answer

A)  1.0 pound of ham. 
B)  1.4 pounds of ham. 
C)  2.1 pounds of ham. 
D)  All of the above are correct. 
A)  1.0 pound of ham. 
B)  1.4 pounds of ham. 
C)  2.1 pounds of ham. 
D)  All of the above are correct.

Question 3

Figure 3-2
Peru's Production Possibilities Frontier  
-Refer to Figure 3-2.The fact that the line slopes downward reflects the fact that

Accepted Answer

A)  for Peru,it is more costly to produce emeralds than it is to produce rubies. 
B)  Peru will produce more emeralds and fewer rubies as time goes by. 
C)  Peru faces a tradeoff between producing emeralds and producing rubies. 
D)  Peru should specialize in producing rubies. 
A)  for Peru,it is more costly to produce emeralds than it is to produce rubies. 
B)  Peru will produce more emeralds and fewer rubies as time goes by. 
C)  Peru faces a tradeoff between producing emeralds and producing rubies. 
D)  Peru should specialize in producing rubies.

Question 4

For a self-sufficient producer,the production possibilities frontier

Accepted Answer

A)  is the same as the consumption possibilities frontier. 
B)  is greater than the consumption possibilities frontier. 
C)  is less than the consumption possibilities frontier. 
D)  is always a straight line. 
A)  is the same as the consumption possibilities frontier. 
B)  is greater than the consumption possibilities frontier. 
C)  is less than the consumption possibilities frontier. 
D)  is always a straight line.

Question 5

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
  
-Refer to Table 3-1.Andia has an absolute advantage in the production of

Accepted Answer

A)  wheat and Zardia has an absolute advantage in the production of beef. 
B)  beef and Zardia has an absolute advantage in the production of wheat. 
C)  both goods and Zardia has an absolute advantage in the production of neither good. 
D)  neither good and Zardia has an absolute advantage in the production of both goods. 
A)  wheat and Zardia has an absolute advantage in the production of beef. 
B)  beef and Zardia has an absolute advantage in the production of wheat. 
C)  both goods and Zardia has an absolute advantage in the production of neither good. 
D)  neither good and Zardia has an absolute advantage in the production of both goods.

Question 6

Define absolute advantage.

Accepted Answer

Absolute advantage m

Question 7

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.Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?

Accepted Answer

A)  5 toothbrushes and 11 hairbrushes 
B)  10 toothbrushes and 9 hairbrushes 
C)  20 toothbrushes and 6 hairbrushes 
D)  30 toothbrushes and 3 hairbrushes 
A)  5 toothbrushes and 11 hairbrushes 
B)  10 toothbrushes and 9 hairbrushes 
C)  20 toothbrushes and 6 hairbrushes 
D)  30 toothbrushes and 3 hairbrushes

Question 8

Table 3-4
  
-Refer to Table 3-4.Which good(s)does Denmark have an absolute advantage producing?

Accepted Answer

A)  both eggs and ham. 
B)  eggs but not ham. 
C)  ham but not eggs. 
D)  neither ham nor eggs. 
A)  both eggs and ham. 
B)  eggs but not ham. 
C)  ham but not eggs. 
D)  neither ham nor eggs.

Question 9

Table 3-9
Barb and Jim run a business that sets up and tests computers.Assume that Barb and Jim can switch between setting up and testing computers at a constant rate.The following table applies.
  
-Refer to Table 3-9.Barb has an absolute advantage in

Accepted Answer

A)  both setting up and testing computers and a comparative advantage in setting up computers. 
B)  both setting up and testing computers and a comparative advantage in testing computers. 
C)  neither setting up nor testing computers and a comparative advantage in setting up computers. 
D)  neither setting up nor testing computers and a comparative advantage in testing computers. 
A)  both setting up and testing computers and a comparative advantage in setting up computers. 
B)  both setting up and testing computers and a comparative advantage in testing computers. 
C)  neither setting up nor testing computers and a comparative advantage in setting up computers. 
D)  neither setting up nor testing computers and a comparative advantage in testing computers.

Question 10

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.Which of the following prices would result in a mutually advantageous trade between Chris and Tony?

Accepted Answer

A)  1 lb.of tomatoes for 23 jars of sauce 
B)  1 lb.of tomatoes for 27 jars of sauce 
C)  1 lb.of tomatoes for 33 jars of sauce 
D)  .Both a and b are correct. 
A)  1 lb.of tomatoes for 23 jars of sauce 
B)  1 lb.of tomatoes for 27 jars of sauce 
C)  1 lb.of tomatoes for 33 jars of sauce 
D)  .Both a and b are correct.

Question 11

Goods produced abroad and sold domestically are called

Accepted Answer

A)  exports. 
B)  imports. 
C)  exchange rates. 
D)  opportunity costs. 
A)  exports. 
B)  imports. 
C)  exchange rates. 
D)  opportunity costs.

Question 12

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn,then

Accepted Answer

A)  Iowa has a comparative advantage in the production of corn. 
B)  Iowa has an absolute advantage in the production of corn. 
C)  Iowa should import corn from Oklahoma. 
D)  Oklahoma should produce just enough corn to satisfy its own residents' demands. 
A)  Iowa has a comparative advantage in the production of corn. 
B)  Iowa has an absolute advantage in the production of corn. 
C)  Iowa should import corn from Oklahoma. 
D)  Oklahoma should produce just enough corn to satisfy its own residents' demands.

Question 13

Harry is a computer company executive,earning $200 per hour managing the company and promoting its products.His daughter Quinn is a high school student,earning $6 per hour helping her grandmother on the farm.Harry's computer is broken.He can repair it himself in one hour.Quinn can repair it in 10 hours.Harry's opportunity cost of repairing the computer is lower than Quinn's.

Accepted Answer

A) True 
 B)False

Question 14

Figure 3-4
 Perry’s Production Possibilities Frontier
  Jordan’s Production Possibilities F 
-Refer to Figure 3-4.If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems,then

Accepted Answer

A)  Perry and Jordan will both gain from this trade. 
B)  Perry will gain from this trade,but Jordan will not. 
C)  Jordan will gain from this trade,but Perry will not. 
D)  neither Perry nor Jordan will gain from this trade. 
A)  Perry and Jordan will both gain from this trade. 
B)  Perry will gain from this trade,but Jordan will not. 
C)  Jordan will gain from this trade,but Perry will not. 
D)  neither Perry nor Jordan will gain from this trade.

Question 15

Which of the following is not a reason people choose to depend on others for goods and services?

Accepted Answer

A)  to improve their lives 
B)  to allow them to enjoy a greater variety of goods and services 
C)  to consume more of each good without working any more hours 
D)  to allow people to produce outside their production possibilities frontiers 
A)  to improve their lives 
B)  to allow them to enjoy a greater variety of goods and services 
C)  to consume more of each good without working any more hours 
D)  to allow people to produce outside their production possibilities frontiers

Question 16

Suppose a gardener produces both green beans and corn in her garden.If she must give up 14 bushels of corn to get 5 bushels of green beans,then her opportunity cost of 1 bushel of green beans is

Accepted Answer

A)  0.36 bushel of corn. 
B)  2.8 bushels of corn. 
C)  14 bushels of corn. 
D)  70 bushels of corn. 
A)  0.36 bushel of corn. 
B)  2.8 bushels of corn. 
C)  14 bushels of corn. 
D)  70 bushels of corn.

Question 17

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.Whenever Bonovia increases its production of ham by 1 pound per month,then it must decrease its production of cheese by

Accepted Answer

A)  0.75 pound. 
B)  0.80 pound. 
C)  1.00 pounds. 
D)  1.25 pounds. 
A)  0.75 pound. 
B)  0.80 pound. 
C)  1.00 pounds. 
D)  1.25 pounds.

Question 18

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
  
-Refer to Table 3-1.Assume that Andia and Zardia each has 360 minutes available.If each person divides his time equally between the production of wheat and beef,then total production is

Accepted Answer

A)  10.5 bushels of wheat and 16.5 pounds of beef. 
B)  21 bushels of wheat and 33 pounds of beef. 
C)  35 bushels of wheat and 22 pounds of beef. 
D)  42 bushels of wheat and 66 pounds of beef. 
A)  10.5 bushels of wheat and 16.5 pounds of beef. 
B)  21 bushels of wheat and 33 pounds of beef. 
C)  35 bushels of wheat and 22 pounds of beef. 
D)  42 bushels of wheat and 66 pounds of beef.

Question 19

In one month,Moira can knit 2 sweaters or 4 scarves.In one month,Tori can knit 1 sweater or 3 scarves.Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves.

Accepted Answer

A) True 
 B)False

Question 20

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

Which of the following is not correct?

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.The fact that the line slopes downward reflects the fact that

For a self-sufficient producer,the production possibilities frontier

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.Andia has an absolute advantage in the production of

Define absolute advantage.

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.Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?

Table 3-4 -Refer to Table 3-4.Which good(s)does Denmark have an absolute advantage producing?

Table 3-9 Barb and Jim run a business that sets up and tests computers.Assume that Barb and Jim can switch between setting up and testing computers at a constant rate.The following table applies. -Refer to Table 3-9.Barb has an absolute advantage in

Goods produced abroad and sold domestically are called

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn,then

Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier -Refer to Figure 3-4.If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems,then

Which of the following is not a reason people choose to depend on others for goods and services?

Suppose a gardener produces both green beans and corn in her garden.If she must give up 14 bushels of corn to get 5 bushels of green beans,then her opportunity cost of 1 bushel of green beans is

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.Whenever Bonovia increases its production of ham by 1 pound per month,then it must decrease its production of cheese by

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.Assume that Andia and Zardia each has 360 minutes available.If each person divides his time equally between the production of wheat and beef,then total production is

In one month,Moira can knit 2 sweaters or 4 scarves.In one month,Tori can knit 1 sweater or 3 scarves.Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves.

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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