Exam 3: Interdependence and the Gains From Trade

Figure 3-22 Alice and Betty's Production Possibilities in one 8-hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. Which of the following prices would result in an mutually advantageous trade for Alice and Betty?

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

Serena Williams should probably not mow her own lawn because

It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6 hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.

Table 3-5 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-5. Assume that Aruba and Iceland each has 80 labor hours available. If each country divides its time equally between the production of coolers and radios, 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.

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Dina has an absolute advantage in the production of

Figure 3-22 Alice and Betty's Production Possibilities in one 8-hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. Which of the following statements is correct regarding absolute advantage?

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

Table 3-35 -Refer to Table 3-35. Which good(s) does Finland have an absolute advantage producing?

Figure 3-3 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-3. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together not produce in a given day?

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. Huang has an absolute advantage in the production of

Table 3-4 Assume that Andrea and Paul can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-4. Which of the following combinations of wheat and beef could Paul not produce in one 8-hour day?

Goods produced abroad and sold domestically are called

Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. ​ -Refer to Table 3-23. 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, then total production is

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is

​When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Arturo's opportunity cost of one burrito is

Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. Brad should specialize in the production of

If one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well.