Exam 3: Interdependence and the Gains From Trade

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. Which if any good(s) does Catherine have an absolute advantage producing?

Charlotte can produce pork and beans and can switch between producing them at a constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce a pound of beans, what is her opportunity cost of pork and what is her opportunity cost of beans?

Figure 3-2 -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

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 Catherine's opportunity cost of producing cake? Explain how you derived your answer.

Table 3-10 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. ​ ​ -Refer to Table 3-10. What is Teresa's opportunity cost of producing one bushel of wheat?

Figure 3-3 -Refer to Figure 3-3. If Tanek must work 0.2 hour to produce each taco, then his production possibilities frontier is based on how many hours of work?

Table 3-13 -Refer to Table 3-13. If the two countries specialize and trade with each other, which country will import radios?

David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.

Figure 3-3 -Refer to Figure 3-3. If Tanek and Kalene each divide their time equally between the production of tacos and burritos, then total production is

​The production possibilities frontier (PPF) illustrates the combinations of goods that society can consume when trading with other producers.

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 Catherine's opportunity cost of producing ice cream? Explain how you derived your answer.

Figure 3-4 -Refer to Figure 3-4. If point A represents Alvina's current production and point B represents Betty's current production, under what circumstances can both Alvina and Betty benefit from specialization and trade?

When there are two people and each is capable of producing two goods, it is possible for one person to have a comparative advantage over the other in both goods.

Table 3-3 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. ​ ​ -Refer to Table 3-3. Assume that Aruba and Iceland each has 120 labor hours available. If each country divides its time equally between the production of coolers and radios, then total production is

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

Table 3-6 Assume that Max and Min can switch between producing mittens and producing hats at a constant rate. ​ ​ -Refer to Table 3-6. Which of the following points is on Max's production possibilities frontier, based on a 36-hour production period?

By definition, exports are

Table 3-3 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. ​ ​ -Refer to Table 3-3. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

Suppose Hank and Tony can both produce corn. If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn.

Table 3-13 -Refer to Table 3-13. If the two countries specialize and trade with each other, which country will import compasses?