Question 1

If a country has a lower opportunity cost than its potential trading partner,the country should decide to be self-sufficient.

Accepted Answer

A) True 
 B)False

Question 2

Unless two people who are producing two goods have exactly the same opportunity costs,then one person will have a comparative advantage in one good,and the other person will have a comparative advantage in the other good.

Accepted Answer

A) True 
 B)False

Question 3

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
  
-Refer to Table 3-7.Japan has an absolute advantage in the production of

Accepted Answer

A)  cars and a comparative advantage in the production of cars. 
B)  cars and a comparative advantage in the production of airplanes. 
C)  neither good and a comparative advantage in the production of cars. 
D)  neither good and a comparative advantage in the production of airplanes. 
A)  cars and a comparative advantage in the production of cars. 
B)  cars and a comparative advantage in the production of airplanes. 
C)  neither good and a comparative advantage in the production of cars. 
D)  neither good and a comparative advantage in the production of airplanes.

Question 4

In an economy consisting of two people producing two goods,it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 5

Figure 3-4
  
-Refer to Figure 3-4.Perry should specialize in the production of

Accepted Answer

A)  novels. 
B)  poems. 
C)  both goods. 
D)  neither good. 
A)  novels. 
B)  poems. 
C)  both goods. 
D)  neither good.

Question 6

Table 3-2
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
  
-Refer to Table 3-2.Iceland should export

Accepted Answer

A)  coolers and import radios. 
B)  radios and import coolers. 
C)  both goods and import neither good. 
D)  neither good and import both goods. 
A)  coolers and import radios. 
B)  radios and import coolers. 
C)  both goods and import neither good. 
D)  neither good and import both goods.

Question 7

Table 3-12
  
-Refer to Table 3-1.For the farmer,the opportunity cost of 15 pounds of meat is

Accepted Answer

A)  12 pounds of potatoes. 
B)  16 pounds of potatoes. 
C)  20 pounds of potatoes. 
D)  24 pounds of potatoes. 
A)  12 pounds of potatoes. 
B)  16 pounds of potatoes. 
C)  20 pounds of potatoes. 
D)  24 pounds of potatoes.

Question 8

Assume for the United States that the opportunity cost of each airplane is 100 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

Accepted Answer

A)  (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars) 
B)  (200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars) 
C)  (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars) 
D)  (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars) 
A)  (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars) 
B)  (200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars) 
C)  (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars) 
D)  (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)

Question 9

Figure 3-2
Peru's Production Possibilities Frontier
  
-Refer to Figure 3-2.Suppose Peru decides to increase its production of rubies by 30.What is the opportunity cost of this decision?

Accepted Answer

A)  1/8 emerald 
B)  1/3 emerald 
C)  1 emerald 
D)  3 emeralds 
A)  1/8 emerald 
B)  1/3 emerald 
C)  1 emerald 
D)  3 emeralds

Question 10

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
  
-Refer to Table 3-1.Assume that Andia and Zardia each has 60 minutes available.If each person spends all his time producing the good in which he has a comparative advantage,then total production is

Accepted Answer

A)  3 bushels of wheat and 6 pounds of beef. 
B)  3.5 bushels of wheat and 5.5 pounds of beef. 
C)  4 bushels of wheat and 5 pounds of beef. 
D)  7 bushels of wheat and 11 pounds of beef. 
A)  3 bushels of wheat and 6 pounds of beef. 
B)  3.5 bushels of wheat and 5.5 pounds of beef. 
C)  4 bushels of wheat and 5 pounds of beef. 
D)  7 bushels of wheat and 11 pounds of beef.

Question 11

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Accepted Answer

A)  Susan has an absolute advantage over Paul in washing windows. 
B)  Susan has a comparative advantage over Paul in washing windows. 
C)  Paul has a comparative advantage over Susan in ironing shirts. 
D)  All of the above are correct. 
A)  Susan has an absolute advantage over Paul in washing windows. 
B)  Susan has a comparative advantage over Paul in washing windows. 
C)  Paul has a comparative advantage over Susan in ironing shirts. 
D)  All of the above are correct.

Question 12

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year,and a worker in Teeveeland can produce either 2 radios or 4 televisions per year.Each nation has 100 workers.Also suppose that each country completely specializes in producing the good in which it has a comparative advantage.If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year,then each country's maximum consumption of new radios and televisions per year will be

Accepted Answer

A)  100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. 
B)  300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. 
C)  200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. 
D)  300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland. 
A)  100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. 
B)  300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. 
C)  200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. 
D)  300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

Question 13

Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
  
-Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

Accepted Answer

A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor. 
A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor.

Question 14

Figure 3-9
  
-Refer to Figure 3-9.Without trade,Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails.As a result,Uzbekistan gained

Accepted Answer

A)  2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails. 
B)  4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails. 
C)  14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails. 
D)  16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails. 
A)  2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails. 
B)  4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails. 
C)  14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails. 
D)  16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails.

Question 15

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Accepted Answer

A)  has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. 
B)  has a comparative advantage in the production of that good. 
C)  has an absolute advantage in the production of that good. 
D)  should be the only producer of that good. 
A)  has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. 
B)  has a comparative advantage in the production of that good. 
C)  has an absolute advantage in the production of that good. 
D)  should be the only producer of that good.

Question 16

Figure 3-2
Peru's Production Possibilities Frontier
  
-Refer to Figure 3-2.Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar.Which of the following combinations of emeralds and rubies could Peru then consume,assuming Peru specializes in emerald production?

Accepted Answer

A)  2 emeralds and 240 rubies 
B)  3 emeralds and 220 rubies 
C)  4 emeralds and 200 rubies 
D)  5 emeralds and 140 rubies 
A)  2 emeralds and 240 rubies 
B)  3 emeralds and 220 rubies 
C)  4 emeralds and 200 rubies 
D)  5 emeralds and 140 rubies

Question 17

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 w

Question 18

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Which of these pairs of points could be on Namibia's production possibilities frontier?

Accepted Answer

A)  (200 huts, 30,000 bowls) and (150 huts, 35,000 bowls) 
B)  (200 huts, 40,000 bowls) and (150 huts, 30,000 bowls) 
C)  (300 huts, 50,000 bowl) and (200 huts, 60,000 bowls) 
D)  (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls) 
A)  (200 huts, 30,000 bowls) and (150 huts, 35,000 bowls) 
B)  (200 huts, 40,000 bowls) and (150 huts, 30,000 bowls) 
C)  (300 huts, 50,000 bowl) and (200 huts, 60,000 bowls) 
D)  (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls)

Question 19

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Accepted Answer

A)  Is it possible for specialization and trade to benefit more than one party to a trade? 
B)  Is it possible for specialization and trade to increase total output of traded goods? 
C)  Do opportunity costs play a role in people's decisions to specialize in certain activities? 
D)  What determines the price at which trade takes place? 
A)  Is it possible for specialization and trade to benefit more than one party to a trade? 
B)  Is it possible for specialization and trade to increase total output of traded goods? 
C)  Do opportunity costs play a role in people's decisions to specialize in certain activities? 
D)  What determines the price at which trade takes place?

Question 20

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
  
-Refer to Table 3-1.What is Zardia's opportunity cost of producing one bushel of wheat?

Accepted Answer

A)  2/3 pound of beef 
B)  3/4 pound of beef 
C)  5/6 pound of beef 
D)  3/2 pounds of beef 
A)  2/3 pound of beef 
B)  3/4 pound of beef 
C)  5/6 pound of beef 
D)  3/2 pounds of beef

If a country has a lower opportunity cost than its potential trading partner,the country should decide to be self-sufficient.

Unless two people who are producing two goods have exactly the same opportunity costs,then one person will have a comparative advantage in one good,and the other person will have a comparative advantage in the other good.

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan has an absolute advantage in the production of

In an economy consisting of two people producing two goods,it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Figure 3-4 -Refer to Figure 3-4.Perry should specialize in the production of

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Iceland should export

Table 3-12 -Refer to Table 3-1.For the farmer,the opportunity cost of 15 pounds of meat is

Assume for the United States that the opportunity cost of each airplane is 100 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.Suppose Peru decides to increase its production of rubies by 30.What is the opportunity cost of this decision?

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Which of these pairs of points could be on Namibia's production possibilities frontier?

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.What is Zardia's opportunity cost of producing one bushel of wheat?

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters

Exam 3: Interdependence and the Gains from Trade.

If a country has a lower opportunity cost than its potential trading partner,the country should decide to be self-sufficient.

Unless two people who are producing two goods have exactly the same opportunity costs,then one person will have a comparative advantage in one good,and the other person will have a comparative advantage in the other good.

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan has an absolute advantage in the production of

In an economy consisting of two people producing two goods,it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Figure 3-4 -Refer to Figure 3-4.Perry should specialize in the production of

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Iceland should export

Table 3-12 -Refer to Table 3-1.For the farmer,the opportunity cost of 15 pounds of meat is

Assume for the United States that the opportunity cost of each airplane is 100 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.Suppose Peru decides to increase its production of rubies by 30.What is the opportunity cost of this decision?

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Which of these pairs of points could be on Namibia's production possibilities frontier?

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.What is Zardia's opportunity cost of producing one bushel of wheat?

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters