Question 1

Suppose Jack and Tucker can both produce two goods: toy cars and dinosaur figures. Which of the following is not possible?

Accepted Answer

A) Jim has an absolute advantage in the production of toy cars and in the production of dinosaur figures. 
B) Jim has an absolute advantage in the production of toy cars and a comparative advantage in the production of dinosaur figures. 
C) Jim has an absolute advantage in the production of dinosaur figures and a comparative advantage in the production of toy cars. 
D) Jim has a comparative advantage in the production of toy cars and in the production of dinosaur figures. 
A) Jim has an absolute advantage in the production of toy cars and in the production of dinosaur figures. 
B) Jim has an absolute advantage in the production of toy cars and a comparative advantage in the production of dinosaur figures. 
C) Jim has an absolute advantage in the production of dinosaur figures and a comparative advantage in the production of toy cars. 
D) Jim has a comparative advantage in the production of toy cars and in the production of dinosaur figures.

Question 2

Assume a farmer has the ability to produce corn and/or beans. Whenever the farmer spends 1 hour less producing corn and 1 hour more producing beans, he reduces his output of corn by 2 bushels and raises his output of beans by 3 bushels. In view of these assumptions, the farmer's production possibilities frontier is bowed out.

Accepted Answer

A) True 
 B)False

Question 3

If China is capable of producing either teddy bears or toy trains or some combination of the two, then

Accepted Answer

A) China should specialize in the product in which it has an absolute advantage. 
B) it would be impossible for China to have an absolute advantage over another country in both products. 
C) it would be difficult for China to benefit from trade with another country if China is efficient in the production of both goods. 
D) China's opportunity cost of teddy bears is the inverse of its opportunity cost of toy trains. 
A) China should specialize in the product in which it has an absolute advantage. 
B) it would be impossible for China to have an absolute advantage over another country in both products. 
C) it would be difficult for China to benefit from trade with another country if China is efficient in the production of both goods. 
D) China's opportunity cost of teddy bears is the inverse of its opportunity cost of toy trains.

Question 4

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Accepted Answer

A) True 
 B)False

Question 5

​Whenever a country has an absolute advantage in the production of a good, that implies that the country should specialize in the production of that good.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 3-1
​
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli. In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
-Refer to Scenario 3-1. Which country, if either, has a comparative advantage producing broccoli? Defend your answer using the numbers given.

Accepted Answer

Country B has a comparative ad

Question 7

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 8

The production possibilities frontier illustrates

Accepted Answer

A) the combinations of output that an economy should produce. 
B) the combinations of output that an economy should consume. 
C) the combinations of output that an economy can produce. 
D) the combinations of output that an economy wants to produce. 
A) the combinations of output that an economy should produce. 
B) the combinations of output that an economy should consume. 
C) the combinations of output that an economy can produce. 
D) the combinations of output that an economy wants to produce.

Question 9

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

Accepted Answer

A) Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. 
B) The principle of comparative advantage applies to countries as well as to individuals. 
C) Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. 
D) A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good. 
A) Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. 
B) The principle of comparative advantage applies to countries as well as to individuals. 
C) Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. 
D) A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.

Question 10

Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not correct?

Accepted Answer

A) The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. 
B) The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. 
C) The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. 
D) The gains from specialization and trade are based not on comparative advantage but on absolute advantage. 
A) The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. 
B) The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. 
C) The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. 
D) The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

Question 12

Scenario 3-1
​
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli. In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
-Refer to Scenario 3-1. Which country, if either, has an absolute advantage producing rice? Defend your answer.

Accepted Answer

Country A has an absolute adva

Question 13

Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?

Accepted Answer

Less than 2 loads of

Question 14

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.

Accepted Answer

No. Although the U.S

Question 15

Table 3-13
  
-Refer to Table 3-13. Which country has an absolute advantage in producing radios?

Accepted Answer

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

Question 16

Production possibilities frontiers cannot be used to illustrate trade-offs.

Accepted Answer

A) True 
 B)False

Question 17

The most obvious benefit of specialization and trade is that they allow us to

Accepted Answer

A) work more hours per week than we otherwise would be able to work. 
B) consume more goods than we otherwise would be able to consume. 
C) spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. 
D) consume more goods by forcing people in other countries to consume fewer goods. 
A) work more hours per week than we otherwise would be able to work. 
B) consume more goods than we otherwise would be able to consume. 
C) spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. 
D) consume more goods by forcing people in other countries to consume fewer goods.

Question 18

Figure 3-4
    
-Refer to Figure 3-4. Both Alvina 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 19

Figure 3-2
  
-Refer to Figure 3-2. If the production possibilities frontier shown is for 32 hours of production, then how long does it take Venezuela to make one pound of peanuts?

Accepted Answer

A) 1/32 hour 
B) 1/4 hour 
C) 4 hours 
D) 3 hours 
A) 1/32 hour 
B) 1/4 hour 
C) 4 hours 
D) 3 hours

Question 20

​When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

Suppose Jack and Tucker can both produce two goods: toy cars and dinosaur figures. Which of the following is not possible?

If China is capable of producing either teddy bears or toy trains or some combination of the two, then

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

​Whenever a country has an absolute advantage in the production of a good, that implies that the country should specialize in the production of that good.

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

The production possibilities frontier illustrates

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

Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.

Which of the following is not correct?

Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?

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.

Table 3-13 -Refer to Table 3-13. Which country has an absolute advantage in producing radios?

Production possibilities frontiers cannot be used to illustrate trade-offs.

The most obvious benefit of specialization and trade is that they allow us to

Figure 3-4 -Refer to Figure 3-4. Both Alvina and Betty

Figure 3-2 -Refer to Figure 3-2. If the production possibilities frontier shown is for 32 hours of production, then how long does it take Venezuela to make one pound of peanuts?

​When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.

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

Whenever a country has an absolute advantage in the production of a good, that implies that the country should specialize in the production of that good.

When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.