Question 1

If US workers can produce everything in less time than Mexican workers, it is not possible for the US to gain from trade with Mexico.

Accepted Answer

A) True 
 B)False

Question 2

Figure 3-17
Maxine's Production Possibilities Frontier
Daisy's Production Possibilities Frontier    
-Refer to Figure 3-17. At which of the following prices would both Maxine and Daisy gain from trade with each other?

Accepted Answer

A) 4 tarts for 2 pies 
B) 8 tarts for 12 pies 
C) 12 tarts for 28 pies 
D) Maxine and Daisy could not both gain from trade with each other at any price. 
A) 4 tarts for 2 pies 
B) 8 tarts for 12 pies 
C) 12 tarts for 28 pies 
D) Maxine and Daisy could not both gain from trade with each other at any price.

Question 3

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. Both Alice and Betty

Accepted Answer

A) face a constant trade-off between producing pitchers of lemonade and pizzas. 
B) can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production. 
C) would benefit from specializing in lemonade production. 
D) would benefit from specializing in pizza production. 
A) face a constant trade-off between producing pitchers of lemonade and pizzas. 
B) can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production. 
C) would benefit from specializing in lemonade production. 
D) would benefit from specializing in pizza production.

Question 4

Figure 3-14
Arturo's Production Possibilities Frontier
Dina's Production Possibilities Frontier    
-Refer to Figure 3-14. Arturo should specialize in the production of

Accepted Answer

A) tacos and Dina should specialize in the production of burritos. 
B) burritos and Dina should specialize in the production of tacos. 
C) both goods and Dina should specialize in the production of neither good. 
D) neither good and Dina should specialize in the production of both goods. 
A) tacos and Dina should specialize in the production of burritos. 
B) burritos and Dina should specialize in the production of tacos. 
C) both goods and Dina should specialize in the production of neither good. 
D) neither good and Dina should specialize in the production of both goods.

Question 5

Figure 3-2
Brazil's Production Possibilities Frontier  
-Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months?

Accepted Answer

A) 5 peanuts and 88 cashews 
B) 4 peanuts and 115 cashews 
C) 3 peanuts and 155 cashews 
D) 1 peanuts and 200 cashews 
A) 5 peanuts and 88 cashews 
B) 4 peanuts and 115 cashews 
C) 3 peanuts and 155 cashews 
D) 1 peanuts and 200 cashews

Question 6

Figure 3-17
Maxine's Production Possibilities Frontier
Daisy's Production Possibilities Frontier    
-Refer to Figure 3-17. Maxine has an absolute advantage in the production of

Accepted Answer

A) both goods and a comparative advantage in the production of pies. 
B) both goods and a comparative advantage in the production of tarts. 
C) neither good and a comparative advantage in the production of pies. 
D) neither good and a comparative advantage in the production of tarts. 
A) both goods and a comparative advantage in the production of pies. 
B) both goods and a comparative advantage in the production of tarts. 
C) neither good and a comparative advantage in the production of pies. 
D) neither good and a comparative advantage in the production of tarts.

Question 7

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 point A represents Alice's production and point B represents Betty's production,

Accepted Answer

A) Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
B) Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas. 
C) Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
D) Only Alice can benefit from specialization and trade. 
A) Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
B) Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas. 
C) Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
D) Only Alice can benefit from specialization and trade.

Question 8

Table 3-31
​  
-Refer to Table 3-31. For the rancher, the opportunity cost of 16 pounds of meat is

Accepted Answer

A) 4.0 pounds of potatoes. 
B) 5.2 pounds of potatoes. 
C) 6.4 pounds of potatoes. 
D) 9.6 pounds of potatoes. 
A) 4.0 pounds of potatoes. 
B) 5.2 pounds of potatoes. 
C) 6.4 pounds of potatoes. 
D) 9.6 pounds of potatoes.

Question 9

Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
​  
-Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is

Accepted Answer

A) 1/2 mixer. 
B) 2 hours of labor. 
C) 2 mixers. 
D) 20 hours of labor. 
A) 1/2 mixer. 
B) 2 hours of labor. 
C) 2 mixers. 
D) 20 hours of labor.

Question 10

Table 3-31
​  
-Refer to Table 3-31. Relative to the rancher, the farmer has a comparative advantage in the production of

Accepted Answer

A) meat, but not in the production of potatoes. 
B) potatoes, but not in the production of meat. 
C) both meat and potatoes. 
D) neither meat nor potatoes. 
A) meat, but not in the production of potatoes. 
B) potatoes, but not in the production of meat. 
C) both meat and potatoes. 
D) neither meat nor potatoes.

Question 11

Figure 3-19
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier    
-Refer to Figure 3-19. Chile has a comparative advantage in the production of

Accepted Answer

A) coffee and Colombia has a comparative advantage in the production of soybeans. 
B) soybeans and Colombia has a comparative advantage in the production of coffee. 
C) both goods and Colombia has a comparative advantage in the production of neither good. 
D) neither good and Colombia has a comparative advantage in the production of both goods. 
A) coffee and Colombia has a comparative advantage in the production of soybeans. 
B) soybeans and Colombia has a comparative advantage in the production of coffee. 
C) both goods and Colombia has a comparative advantage in the production of neither good. 
D) neither good and Colombia has a comparative advantage in the production of both goods.

Question 12

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then

Accepted Answer

A) Dave has a comparative advantage in the production of sweaters. 
B) Caroline has a comparative advantage in the production of sweaters. 
C) Dave has a comparative advantage in the production of socks. 
D) Dave has a comparative advantage in the production of both sweaters and socks. 
A) Dave has a comparative advantage in the production of sweaters. 
B) Caroline has a comparative advantage in the production of sweaters. 
C) Dave has a comparative advantage in the production of socks. 
D) Dave has a comparative advantage in the production of both sweaters and socks.

Question 13

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

Accepted Answer

A) the United States should produce more pork than what it requires and export some of it to Mexico. 
B) the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. 
C) the United States should refrain altogether from producing pork and import all of what it requires from Mexico. 
D) Mexico has nothing to gain from importing United States pork. 
A) the United States should produce more pork than what it requires and export some of it to Mexico. 
B) the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. 
C) the United States should refrain altogether from producing pork and import all of what it requires from Mexico. 
D) Mexico has nothing to gain from importing United States pork.

Question 14

Figure 3-12
Argentina's Production Possibilities Frontier
Peru's Production Possibilities Frontier    
-Refer to Figure 3-12. If Argentina and Peru each divides its time equally between producing corn and fish, then total production is

Accepted Answer

A) 13 tons of corn and 15 tons of fish. 
B) 13 tons of corn and 10 tons of fish. 
C) 12 tons of corn and 16 tons of fish. 
D) 12 tons of corn and 11 tons of fish 
A) 13 tons of corn and 15 tons of fish. 
B) 13 tons of corn and 10 tons of fish. 
C) 12 tons of corn and 16 tons of fish. 
D) 12 tons of corn and 11 tons of fish

Question 15

​A production possibilities frontier (PPF) is characterized by increasing opportunity costs when

Accepted Answer

A) ​the PPF is a straight line 
B) ​the PPF is bowed inward 
C) ​the PPF is bowed outward 
D) ​increasing opportunity costs do not occur with PPF's 
A) ​the PPF is a straight line 
B) ​the PPF is bowed inward 
C) ​the PPF is bowed outward 
D) ​increasing opportunity costs do not occur with PPF's

Question 16

Figure 3-15
Perry's Production Possibilities Frontier
Jordan's Production Possibilities Frontier    
-Refer to Figure 3-15. 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 17

Figure 3-19
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier    
-Refer to Figure 3-19. If Chile and Colombia each spends all of its time producing the good in which it has a comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds of soybeans, then Chile will consume

Accepted Answer

A) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
B) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. 
C) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
D) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. 
A) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
B) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. 
C) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
D) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans.

Question 18

Table 3-31
​  
-Refer to Table 3-31. For the farmer, 12.8 pounds of

Accepted Answer

A) meat is the opportunity cost of 10.6 pounds of potatoes. 
B) meat is the opportunity cost of 16.0 pounds of potatoes. 
C) potatoes is the opportunity cost of 6.8 pounds of meat. 
D) potatoes is the opportunity cost of 8.0 pounds of meat. 
A) meat is the opportunity cost of 10.6 pounds of potatoes. 
B) meat is the opportunity cost of 16.0 pounds of potatoes. 
C) potatoes is the opportunity cost of 6.8 pounds of meat. 
D) potatoes is the opportunity cost of 8.0 pounds of meat.

Question 19

Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day.  
-Refer to Table 3-21. Jamaica and Norway would not be able to gain from trade if Norway's opportunity cost of one radio changed to

Accepted Answer

A) 0 coolers. 
B) 1 cooler. 
C) 2 coolers. 
D) Jamaica and Norway can always gain from trade regardless of their opportunity costs. 
A) 0 coolers. 
B) 1 cooler. 
C) 2 coolers. 
D) Jamaica and Norway can always gain from trade regardless of their opportunity costs.

Question 20

When can two countries gain from trading two goods?

Accepted Answer

A) when the first country can only produce the first good and the second country can only produce the second good 
B) when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost 
C) when the first country is better at producing both goods and the second country is worse at producing both goods 
D) Two countries could gain from trading two goods under all of the above conditions. 
A) when the first country can only produce the first good and the second country can only produce the second good 
B) when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost 
C) when the first country is better at producing both goods and the second country is worse at producing both goods 
D) Two countries could gain from trading two goods under all of the above conditions.

Exam 3: Interdependence and the Gains From Trade

If US workers can produce everything in less time than Mexican workers, it is not possible for the US to gain from trade with Mexico.

Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. At which of the following prices would both Maxine and Daisy gain from trade with each other?

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. Both Alice and Betty

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Arturo should specialize in the production of

Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months?

Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. Maxine has an absolute advantage in the production of

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 point A represents Alice's production and point B represents Betty's production,

Table 3-31 ​ -Refer to Table 3-31. For the rancher, the opportunity cost of 16 pounds of meat is

Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. ​ -Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is

Table 3-31 ​ -Refer to Table 3-31. Relative to the rancher, the farmer has a comparative advantage in the production of

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile has a comparative advantage in the production of

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

Figure 3-12 Argentina's Production Possibilities Frontier Peru's Production Possibilities Frontier -Refer to Figure 3-12. If Argentina and Peru each divides its time equally between producing corn and fish, then total production is

​A production possibilities frontier (PPF) is characterized by increasing opportunity costs when

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. 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

Table 3-31 ​ -Refer to Table 3-31. For the farmer, 12.8 pounds of

When can two countries gain from trading two goods?

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

Applications: 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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Table 3-31 -Refer to Table 3-31. For the rancher, the opportunity cost of 16 pounds of meat is

Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is

Table 3-31 -Refer to Table 3-31. Relative to the rancher, the farmer has a comparative advantage in the production of

A production possibilities frontier (PPF) is characterized by increasing opportunity costs when

Table 3-31 -Refer to Table 3-31. For the farmer, 12.8 pounds of