Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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.

Accepted Answer

The answer of It takes Heather 1 hour to change...

Question 3

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Accepted Answer

A) Shawn has a comparative advantage in the production of donuts. 
B) Sue has a comparative advantage in the production of donuts. 
C) Shawn has an absolute advantage in the production of donuts. 
D) Sue has an absolute advantage in the production of donuts. 
A) Shawn has a comparative advantage in the production of donuts. 
B) Sue has a comparative advantage in the production of donuts. 
C) Shawn has an absolute advantage in the production of donuts. 
D) Sue has an absolute advantage in the production of donuts.

Question 4

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?

Accepted Answer

The opportunity cost of a poun

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

Accepted Answer

A) True 
 B)False

Question 8

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. Bahamas and Denmark would not be able to gain from trade if Denmark's opportunity cost of one radio changed to

Accepted Answer

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

Question 9

When a country has a comparative advantage in producing a certain good,

Accepted Answer

A) the country should import that good. 
B) the country should produce just enough of that good for its own consumption. 
C) the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good. 
D) then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier. 
A) the country should import that good. 
B) the country should produce just enough of that good for its own consumption. 
C) the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good. 
D) then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier.

Question 10

Nick and Traci are two woodworkers who both make tables and chairs. In one month, Nick can make 3 tables or 6 chairs, whereas Traci can make 16 tables or 48 chairs. Given this, we know that the opportunity cost of 1 chair is

Accepted Answer

A) 1/2 table for Nick and 1/3 table for Traci. 
B) 1/2 table for Nick and 3 tables for Traci. 
C) 3 tables for Nick and 1/2 table for Traci. 
D) 1/3 table for Nick and 2 tables for Traci. 
A) 1/2 table for Nick and 1/3 table for Traci. 
B) 1/2 table for Nick and 3 tables for Traci. 
C) 3 tables for Nick and 1/2 table for Traci. 
D) 1/3 table for Nick and 2 tables for Traci.

Question 11

Table 3-13
  
-Refer to Table 3-13. What is England's opportunity cost of one compass?

Accepted Answer

The answer of Table 3-13
  
-Refer to Table 3-13....

Question 12

​Trade between nations is based on absolute advantage, which occurs when a country has a lower opportunity cost of producing a good.

Accepted Answer

A) True 
 B)False

Question 13

Figure 3-2
  
-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 Venezuela produce in two months?

Accepted Answer

A) 7 pounds of peanuts and 135 pounds of cashews 
B) 5 pounds of peanuts and 160 pounds of cashews 
C) 2 pounds of peanuts and 240 pounds of cashews 
D) 3 pounds of peanuts and 150 pounds of cashews 
A) 7 pounds of peanuts and 135 pounds of cashews 
B) 5 pounds of peanuts and 160 pounds of cashews 
C) 2 pounds of peanuts and 240 pounds of cashews 
D) 3 pounds of peanuts and 150 pounds of cashews

Question 14

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.

Accepted Answer

A) True 
 B)False

Question 15

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. Bahamas's opportunity cost of one cooler is

Accepted Answer

A) 0.5 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. 
B) 0.5 radios, and Denmark's opportunity cost of one cooler is 8 radios. 
C) 2 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. 
D) 2 radios, and Denmark's opportunity cost of one cooler is 8 radios. 
A) 0.5 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. 
B) 0.5 radios, and Denmark's opportunity cost of one cooler is 8 radios. 
C) 2 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. 
D) 2 radios, and Denmark's opportunity cost of one cooler is 8 radios.

Question 16

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

Accepted Answer

A) 15 blankets and 35 meals. 
B) 25 blankets and 40 meals. 
C) 35 blankets and 45 meals. 
D) 50 blankets and 80 meals. 
A) 15 blankets and 35 meals. 
B) 25 blankets and 40 meals. 
C) 35 blankets and 45 meals. 
D) 50 blankets and 80 meals.

Question 17

Economists use the term ______ to refer to the ability to produce a good at a lower opportunity cost than another producer.

Accepted Answer

comparativ

Question 18

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Accepted Answer

A) True 
 B)False

Question 19

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 20

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Accepted Answer

Yes. Greg has a comparative ad

Exam 3: Interdependence and the Gains From Trade

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

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.

If Shawn can produce more donuts in one day than Sue can produce in one day, then

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.

In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

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. Bahamas and Denmark would not be able to gain from trade if Denmark's opportunity cost of one radio changed to

When a country has a comparative advantage in producing a certain good,

Nick and Traci are two woodworkers who both make tables and chairs. In one month, Nick can make 3 tables or 6 chairs, whereas Traci can make 16 tables or 48 chairs. Given this, we know that the opportunity cost of 1 chair is

Table 3-13 -Refer to Table 3-13. What is England's opportunity cost of one compass?

​Trade between nations is based on absolute advantage, which occurs when a country has a lower opportunity cost of producing a good.

Figure 3-2 -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 Venezuela produce in two months?

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.

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. Bahamas's opportunity cost of one cooler is

Economists use the term ______ to refer to the ability to produce a good at a lower opportunity cost than another producer.

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

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

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. Bahamas and Denmark would not be able to gain from trade if Denmark's opportunity cost of one radio changed to

Trade between nations is based on absolute advantage, which occurs when a country has a lower opportunity cost of producing a good.

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. Bahamas's opportunity cost of one cooler is

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.