Exam 3: Interdependence and the Gains From Trade

Figure 3-2 -Refer to Figure 3-2.For Jerry,the opportunity cost of 1 pound of cones is

Figure 3-1 -Refer to Figure 3-1.Assume Cliff and Paul were both producing wheat and corn,and each person was dividing his time equally between the two.Then each decides to specialize in the product in which he has a comparative advantage.Furthermore,they agree to trade 3 bushels of wheat for 3 bushels of corn.As a result of these new arrangements,Cliff is able to consume

Figure 3-3 -Refer to Figure 3-3.Which of the following statements is correct?

Table 3-5 -Refer to Table 3-5.The United States has an absolute advantage in

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 4 tables or 20 chairs,while Sandy can make 6 tables or 18 chairs.Given this,we know that

Ben bakes bread and Shawna knits sweaters.Ben likes to eat bread and wear sweaters,and the same is true for Shawna.In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

Suppose the United States has a comparative advantage over Mexico in producing pork.The principle of comparative advantage asserts that

Figure 3-5 The graph below represents the various combinations of cars and corn that Country A could produce in a given month. (On the vertical axis, corn is measured in bushels.) -Refer to Figure 3-5.Which of the following combinations of cars and corn could Country A produce in a given month?

These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their baker Figure 3-4 -Refer to Figure 3-4.Barney has an absolute advantage in

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars.Also assume that Germany has an absolute advantage in both fish and cars.If these two countries specialize and trade so as to maximize the benefits of specialization and trade,

Figure 3-3 -Refer to Figure 3-3.Originally,Fred was spending half of his time producing tap shoes and the other half of his time producing ballet slippers;Ginger was dividing her time the same way.Then,Fred began spending all of his time producing the good in which he has a comparative advantage,and Ginger began spending all of her time producing the good in which she has a comparative advantage.As a result,

The production possibilities frontier is a downward-sloping straight line when

Table 3-4 Brenda and Eric run a business that involves setting up and testing computers. The following table applies. -Refer to Table 3-4.For Eric,the opportunity cost of setting up a computer is

Adam Smith

Use the accompanying table to answer the following questions: Table 3-6 -Refer to Table 3-6.The opportunity cost of 1 unit of cheese in Spain is

Use the accompanying table to answer the following questions: Table 3-6 -Refer to Table 3-6.England has an absolute advantage in

Table 3-4 Brenda and Eric run a business that involves setting up and testing computers. The following table applies. -Refer to Table 3-4.Which of the following statements is correct?

Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year,and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year.There are 20 workers in Agland and 10 workers in Zenland.Currently the two countries do not trade.Agland produces and consumes 100 units of grain and 20 units of incense per year.Zenland produces and consumes 50 units of grain and no incense per year.If each country made the decision to specialize in producing the good for which it has a comparative advantage,then the combined yearly output of the two countries would increase by

Without trade,

Table 3-5 -Refer to Table 3-5.If the United States and Japan trade based on the principle of comparative advantage,Japan will