Exam 3: Interdependence and the Gains from Trade

Table 3-3 -Refer to Table 3-3.What is the opportunity cost of one quilt for Carolyn?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.For Jerry,what is the opportunity cost of 1 kg of cones?

What are exports?

Table 3-1 -Refer to Table 3-1.How could the farmer and rancher both benefit?

What is David Ricardo's contribution?

According to Adam Smith,what should a person never attempt to make at home?

Figure 3-4 -Refer to Figure 3-4.What does each of the two producers have a comparative or absolute advantage in?

It takes Russell 6 hours to produce a bushel of corn and 2 hours to wash and polish a car.It takes Wilma 6 hours to produce a bushel of corn and 1 hour to wash and polish a car.Wilma and Russell cannot gain from specialization and trade,since it takes each of them 6 hours to produce 1 bushel of corn.

What is comparative advantage based on?

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Which of the following does trade NOT allow for?

What is the best reason for people to provide you with goods and services?

Table 3-5 -Refer to Table 3-5.Which country has an absolute or comparative advantage in each product?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.If Fred and Ginger devote half of their time (20 hours)to the production of each good,what would the total production be?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.What is the opportunity cost of one pair of ballet slippers for Ginger?

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year,and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year.There are 10 workers in each country.No trade occurs between the two countries.Boatland produces and consumes 25 units of wheat and 125 units of fish per year,while Farmland produces and consumes 125 units of wheat and 25 units of fish per year.If trade were to occur,Boatland would trade 100 units of fish to Farmland in exchange for 100 units of wheat.If Boatland no longer grew any of its own wheat,how many units of fish could it now consume along with the 100 units of imported wheat?

Table 3-4 -Refer to the table.What is the opportunity cost of one basket for Alberta?

Suppose a producer can produce shoes with lower opportunity cost than boots.What else do we need to know if we want to determine this producer's comparative advantage?

Figure 3-6 These figures illustrate the production possibilities available to Barney and Betty with eight hours of labour in their bakery. -Refer to Figure 3-6.What is the opportunity cost of one loaf of bread for Barney?

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.If the two countries do not trade,Cornland will produce and consume 400 bushels of corn and 100 bushels of oats,while Oatland will produce and consume 50 bushels of corn and 500 bushels of oats.Combined output for the two countries would therefore be 450 bushels of corn and 600 bushels of oats.If the two countries do trade,each will completely specialize in producing the crop for which it has a comparative advantage.If trade occurs,by what amount will the combined output for the two countries increase?