Question 1

The gains from trade are

Accepted Answer

A) evident in economic models, but seldom observed in the real world. 
B) evident in the real world, but impossible to capture in economic models. 
C) a result of more efficient resource allocation than would be observed in the absence of trade. 
D) based on the principle of absolute advantage. 
A) evident in economic models, but seldom observed in the real world. 
B) evident in the real world, but impossible to capture in economic models. 
C) a result of more efficient resource allocation than would be observed in the absence of trade. 
D) based on the principle of absolute advantage.

Question 2

​Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Accepted Answer

A) True 
 B)False

Question 3

Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.
a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally?
b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides?
c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides?

Accepted Answer

a.
If both tasks are divided equally, it

Question 4

Table 3-2
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   ​
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-Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Accepted Answer

A) 2 units of pastrami and 20 units of milk 
B) 4.5 units of pastrami and 20 units of milk 
C) 20 units of pastrami and 20 units of milk 
D) 4 units of pastrami and 10 units of milk 
A) 2 units of pastrami and 20 units of milk 
B) 4.5 units of pastrami and 20 units of milk 
C) 20 units of pastrami and 20 units of milk 
D) 4 units of pastrami and 10 units of milk

Question 5

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Accepted Answer

A) True 
 B)False

Question 6

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Accepted Answer

A) neither person faces trade-off. 
B) the frontiers are straight lines. 
C) the frontiers are bowed out. 
D) they choose not to trade with one another. 
A) neither person faces trade-off. 
B) the frontiers are straight lines. 
C) the frontiers are bowed out. 
D) they choose not to trade with one another.

Question 7

The gains from specialization and trade are based on ______ advantage.

Accepted Answer

The answer of The gains from specialization and trade are...

Question 8

Figure 3-7
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier     ​
-Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Accepted Answer

The answer of Figure 3-7
Mary's Production Possibilities Frontier Kate's Production...

Question 9

Figure 3-6
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 Figure 3-6. What is Greg's opportunity cost of producing cake? Explain how you derived your answer.

Accepted Answer

It takes Greg 2 hours to produ

Question 10

Table 3-11
Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate.
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-Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Accepted Answer

A) 1 radio for 1 cooler 
B) 1 radio for 4 coolers 
C) 1 radio for 10 coolers 
D) 1 radio for 15 coolers 
A) 1 radio for 1 cooler 
B) 1 radio for 4 coolers 
C) 1 radio for 10 coolers 
D) 1 radio for 15 coolers

Question 11

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?

Accepted Answer

Yes. More than 2.5 c

Question 12

Figure 3-4
    
-Refer to Figure 3-4. If point A represents Alvina's production and point B represents Betty's production,

Accepted Answer

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

Exam 3: Interdependence and the Gains From Trade

The gains from trade are

​Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Table 3-2 ​ ​ ​ ​ -Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

The gains from specialization and trade are based on ______ advantage.

Figure 3-7 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier ​ -Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Table 3-11 Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate. ​ ​ -Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?

Figure 3-4 -Refer to Figure 3-4. If point A represents Alvina's production and point B represents Betty's production,

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 Nations 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

Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Table 3-2 -Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Figure 3-7 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Table 3-11 Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?