Exam 3: Interdependence and the Gains From Trade

Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Portugal has an absolute advantage in the production of

Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, a mutually advantageous trade can be struck at a price of one apple pie for 1/3 gallon of ice cream.

Suppose that Venezuela produces beef and oil and it can switch production between each at a constant rate. If the most beef it can produce is 300 million pounds and the most oil it can produce is 50 million barrels, then what is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil?

Under what conditions is an economy's production possibilities frontier also its consumption possibilities frontier?

Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. ​ -Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?

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?

Table 3-40 ​ ​ -Refer to Table 3-40. Germany should specialize in the production of

Jennifer takes 2 hours to make a loaf of bread and 1 hour to make a dozen cookies. Janet takes 3 hours to make a loaf of bread and 3/4 hours to make a dozen cookies. Who, if either, has an absolute advantage baking bread? Who, if either, has an absolute advantage making cookies?

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. What is Theresa's opportunity cost of producing one bushel of wheat?

Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-5. If Hosne and Merve each divides her time equally between making purses and making wallets, then total production is

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. Which of the following combinations of coolers and radios could Aruba produce in one 40-hour week?

Trade allows all countries to achieve greater prosperity.

A person can benefit from specialization and trade by obtaining a good at a price that is

Table 3-36 -Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

For a self-sufficient producer, the production possibilities frontier

Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Define absolute advantage.

Table 3-9 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. ​ -Refer to Table 3-9. Which of the following combinations of mixers and toasters could Maya produce in 60 hours?