Exam 3: Interdependence and the Gains From Trade

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes. It takes Zach 1.5 hours to change the oil in the car. For Zach to have a comparative advantage changing the oil it must take him more than ______ minutes to do the dishes.

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. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Which of the following is not correct?

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

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 mixer for Miguel is

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Without trade, Arturo produced and consumed 240 tacos and 120 burritos and Dina produced and consumed 100 tacos and 150 burritos. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. As a result, Arturo gained

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. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours?

Table 3-41 ​ ​ -Refer to Table 3-41. What is Russia's opportunity cost of one radio?

Table 3-41 ​ ​ -Refer to Table 3-41. What is England's opportunity cost of one compass?

Which of the following statements about comparative advantage is not true?

Figure 3-23 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 3-23. In the nation of Cropitia, the opportunity cost of a pound of ham is 0.3 pounds of cheese. Bonovia and Cropitia both can gain from trading with one another if one pound of ham trades for

If the U.S. could produce 5 televisions per hour of labor and China could produce 3 televisions per hour of labor, would it necessarily follow that the U.S. should specialize in television production? Explain your answer using the concepts of comparative and or absolute advantage.

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Adam Smith

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. If Perry and Jordan switch from each person dividing their time equally between the production of novels and poems to each person spending all of their time producing the good in which they have a comparative advantage, then total production of novels will increase by

Trade allows a country to consume outside its production possibilities frontier.

Absolute advantage is found by comparing different producers'

The production possibilities frontier illustrates

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ ​ -Refer to Table 3-24. England should specialize in the production of

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. Bintu has a comparative advantage in the production of