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.

Unless two people who are producing two goods have exactly the same opportunity costs, then one person will have a comparative advantage in one good, and the other person will have a comparative advantage in the other good.

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. If Alice produces only lemonade, she can produce

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

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

Table 3-17 The following table contains some production possibilities for an economy for a given year. -Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. ​ -Refer to Table 3-27. At which of the following prices would both Huang and Min gain from trade with each other?

Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?

With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of peas. With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas. Can Elmer and Bugs gain from trade? Defend your answer.

​Table 3-38 -​Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn and soybeans each state can produce in one growing season. From this table, we can conclude that Iowa should specialize in the production of

What does a production possibilities frontier represent?

Table 3-3 Production Opportunities ​ -Refer to Table 3-3. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

Table 3-39 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. ​ ​ ​ -Refer to Table 3-39. Korea should specialize in the production of

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. Canada has a comparative advantage in the production of

​Table 3-38 -​Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From this table, we know that Nebraska has an absolute advantage in the production of

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

Some countries win in international trade, while other countries lose.

Table 3-7 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. ​ -Refer to Table 3-7. 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