Exam 3: Interdependence and the Gains from Trade

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

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.Who has a comparative advantage in each product?

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 calculations 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?

Table 3-2 -Refer to Table 3-2.What does each producer have an absolute or comparative advantage in?

Figure 3-4 -Refer to Figure 3-4.For Jerry,what is the opportunity cost of one bottle of beer?

Which of the following is NOT an implication of our model of trade?

Table 3-6 -Refer to Table 3-5.Which country has an absolute or comparative advantage in each product?

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,where Sandy can make 6 tables or 18 chairs.What is the opportunity cost of 1 chair?

If it takes Canadian workers fewer hours to produce every good than it takes German workers,Canada cannot gain from trade with Germany.

Who developed the principle of comparative advantage?

Trade is based on absolute advantage.

Table 3-1 -Refer to Table 3-1.What is the opportunity cost of 1 kg of potatoes for the farmer?

Table 3-6 -Refer to Table 3-5.England and Spain trade according to the principle of comparative advantage.If the international price of bread is 2.5 units of cheese for 1 unit of bread,what is the gain from trade to England per unit of bread traded?

What is the difference between production possibilities frontiers that are bowed out and those that are linear?

Table 3-1 -Refer to Table 3-1.What does each producer have an absolute or comparative advantage in?

Why does total output in an economy increase when each person specializes?

Table 3-6 -Refer to Table 3-5.What is the opportunity cost of one unit of cheese in Spain?

Table 3-6 -Refer to Table 3-5.If England and Spain trade based on the principle of comparative advantage,which country will export or import each product?

Figure 3-2 -Refer to Figure 3-2.What do the two producers have an absolute or comparative advantage in?

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