Question 1

Trade between countries

Accepted Answer

A) allows each country to consume at a point outside its production possibilities frontier. 
B) limits a country's ability to produce goods and services on its own. 
C) must benefit both countries equally; otherwise, trade is not mutually beneficial. 
D) can best be understood by examining the countries' absolute advantages. 
A) allows each country to consume at a point outside its production possibilities frontier. 
B) limits a country's ability to produce goods and services on its own. 
C) must benefit both countries equally; otherwise, trade is not mutually beneficial. 
D) can best be understood by examining the countries' absolute advantages.

Question 2

Figure 3-1
  
-Refer to Figure 3-1.The opportunity cost of 1 bushel of corn is

Accepted Answer

A) 4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Paul has the comparative advantage in growing corn. 
B) 4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn. 
C) 5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Paul has the comparative advantage in growing corn. 
D) 5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn. 
A) 4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Paul has the comparative advantage in growing corn. 
B) 4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn. 
C) 5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Paul has the comparative advantage in growing corn. 
D) 5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn.

Question 3

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

Accepted Answer

A) both countries can consume outside of their respective production possibilities frontiers. 
B) both countries can have more airplanes and cars than they would have without trade. 
C) Japan will specialize in cars and the United States will specialize in airplanes. 
D) All of the above are correct. 
A) both countries can consume outside of their respective production possibilities frontiers. 
B) both countries can have more airplanes and cars than they would have without trade. 
C) Japan will specialize in cars and the United States will specialize in airplanes. 
D) All of the above are correct.

Question 4

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.The fact that the line slopes downward reflects the fact that

Accepted Answer

A) for Country A, it is more costly to produce a car than it is to produce a bushel of corn. 
B) Country A will produce more cars and fewer bushels of corn as time goes by. 
C) Country A faces a tradeoff between producing cars and producing corn. 
D) Country A should specialize in producing corn. 
A) for Country A, it is more costly to produce a car than it is to produce a bushel of corn. 
B) Country A will produce more cars and fewer bushels of corn as time goes by. 
C) Country A faces a tradeoff between producing cars and producing corn. 
D) Country A should specialize in producing corn.

Question 5

Table 3-1
  
-Refer to Table 3-1.The opportunity cost of 1 pound of potatoes for the rancher is

Accepted Answer

A) 5 hours of labor. 
B) 4 hours of labor. 
C) 5/4 pounds of meat. 
D) 4/5 pound of meat. 
A) 5 hours of labor. 
B) 4 hours of labor. 
C) 5/4 pounds of meat. 
D) 4/5 pound of meat.

Question 6

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.The opportunity cost of 1 loaf of bread for Barney is

Accepted Answer

A) 1/4 pie. 
B) 1/2 pie. 
C) 1 pie. 
D) 2 pies. 
A) 1/4 pie. 
B) 1/2 pie. 
C) 1 pie. 
D) 2 pies.

Question 7

Table 3-3
  
-Refer to Table 3-3.The opportunity cost of 1 basket for Missouri is

Accepted Answer

A) 1/4 birdhouse. 
B) 1/2 birdhouse. 
C) 2 birdhouses. 
D) 2 2/3 birdhouses. 
A) 1/4 birdhouse. 
B) 1/2 birdhouse. 
C) 2 birdhouses. 
D) 2 2/3 birdhouses.

Question 8

Recently,it has been suggested by researchers that the theory of comparative advantage may explain the fact that

Accepted Answer

A) Tiger Woods mows his own lawn. 
B) brilliant scholars write textbooks. 
C) Homo sapiens displaced Neanderthals. 
D) many countries impose tariffs. 
A) Tiger Woods mows his own lawn. 
B) brilliant scholars write textbooks. 
C) Homo sapiens displaced Neanderthals. 
D) many countries impose tariffs.

Question 9

Differences in opportunity cost allow for gains from trade.

Accepted Answer

A) True 
 B)False

Question 10

International trade may make some individuals in a nation better off,while other individuals are made worse off.

Accepted Answer

A) True 
 B)False

Question 11

A country's consumption possibilities frontier can be outside its production possibilities frontier if

Accepted Answer

A) the country's technology is superior to the technologies of other countries. 
B) the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries. 
C) the country engages in trade. 
D) All of the above are correct. 
A) the country's technology is superior to the technologies of other countries. 
B) the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries. 
C) the country engages in trade. 
D) All of the above are correct.

Question 12

Travis can mow a lawn in two hours or he can trim a tree in one hour.Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Accepted Answer

A) Travis has an absolute advantage over Ricardo in trimming trees. 
B) Travis has a comparative advantage over Ricardo in mowing lawns. 
C) Ricardo has a comparative advantage over Travis in trimming trees. 
D) All of the above are correct. 
A) Travis has an absolute advantage over Ricardo in trimming trees. 
B) Travis has a comparative advantage over Ricardo in mowing lawns. 
C) Ricardo has a comparative advantage over Travis in trimming trees. 
D) All of the above are correct.

Question 13

Figure 3-1
  
-Refer to Figure 3-1.Which of the following statements is correct?

Accepted Answer

A) Paul has an absolute advantage in both wheat and corn. 
B) Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn. 
C) Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn. 
D) Cliff has an absolute advantage in both wheat and corn. 
A) Paul has an absolute advantage in both wheat and corn. 
B) Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn. 
C) Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn. 
D) Cliff has an absolute advantage in both wheat and corn.

Question 14

For the following question(s), use the accompanying table.
Table 3-2
  
-Refer to Table 3-2.For Carolyn,the opportunity cost of 1 dress is

Accepted Answer

A) 5 quilts. 
B) 4 quilts. 
C) 1/2 quilt. 
D) 1/10 quilt. 
A) 5 quilts. 
B) 4 quilts. 
C) 1/2 quilt. 
D) 1/10 quilt.

Question 15

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 these points would not be on Brenda's production possibilities frontier,based on a 40-hour week and assuming Brenda can switch between setting up and testing computers at a constant rate?

Accepted Answer

A) (60 computers tested, 0 computers set-up) 
B) (30 computers tested, 40 computers set-up) 
C) (12 computers tested, 60 computers set-up) 
D) (6 computers tested, 72 computers set-up) 
A) (60 computers tested, 0 computers set-up) 
B) (30 computers tested, 40 computers set-up) 
C) (12 computers tested, 60 computers set-up) 
D) (6 computers tested, 72 computers set-up)

Question 16

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.The graph that is shown is called a

Accepted Answer

A) supply line. 
B) opportunity line. 
C) production possibilities frontier. 
D) consumption possibilities frontier. 
A) supply line. 
B) opportunity line. 
C) production possibilities frontier. 
D) consumption possibilities frontier.

Question 17

Table 3-3
  
-Refer to Table 3-3.If Montana and Missouri trade based on the principle of comparative advantage,Montana will export

Accepted Answer

A) baskets and Missouri will export birdhouses. 
B) birdhouses and Missouri will export baskets. 
C) neither good and Missouri will export both goods. 
D) both goods and Missouri will export neither good. 
A) baskets and Missouri will export birdhouses. 
B) birdhouses and Missouri will export baskets. 
C) neither good and Missouri will export both goods. 
D) both goods and Missouri will export neither good.

Question 18

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

Accepted Answer

A) 4 units of cheese. 
B) 2 units of cheese. 
C) 1 unit of cheese. 
D) 1/2 unit of cheese. 
A) 4 units of cheese. 
B) 2 units of cheese. 
C) 1 unit of cheese. 
D) 1/2 unit of cheese.

Question 19

Figure 3-1
  
-Refer to Figure 3-1.Suppose Cliff must work 5 hours to produce each bushel of corn.Then Cliff's production possibilities frontier is based on how many hours of work?

Accepted Answer

A) 0.2 hours 
B) 2.5 hours 
C) 15 hours 
D) 20 hours 
A) 0.2 hours 
B) 2.5 hours 
C) 15 hours 
D) 20 hours

Question 20

Jonathan can make a bird house in 3 hours.He can make a bird feeder in 1 hour.The opportunity cost to Jonathan of making a bird house is 1/3 bird feeder.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

Trade between countries

Figure 3-1 -Refer to Figure 3-1.The opportunity cost of 1 bushel of corn is

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

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.The fact that the line slopes downward reflects the fact that

Table 3-1 -Refer to Table 3-1.The opportunity cost of 1 pound of potatoes for the rancher is

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.The opportunity cost of 1 loaf of bread for Barney is

Table 3-3 -Refer to Table 3-3.The opportunity cost of 1 basket for Missouri is

Recently,it has been suggested by researchers that the theory of comparative advantage may explain the fact that

Differences in opportunity cost allow for gains from trade.

International trade may make some individuals in a nation better off,while other individuals are made worse off.

A country's consumption possibilities frontier can be outside its production possibilities frontier if

Travis can mow a lawn in two hours or he can trim a tree in one hour.Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

Figure 3-1 -Refer to Figure 3-1.Which of the following statements is correct?

For the following question(s), use the accompanying table. Table 3-2 -Refer to Table 3-2.For Carolyn,the opportunity cost of 1 dress is

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.The graph that is shown is called a

Table 3-3 -Refer to Table 3-3.If Montana and Missouri trade based on the principle of comparative advantage,Montana will export

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

Figure 3-1 -Refer to Figure 3-1.Suppose Cliff must work 5 hours to produce each bushel of corn.Then Cliff's production possibilities frontier is based on how many hours of work?

Jonathan can make a bird house in 3 hours.He can make a bird feeder in 1 hour.The opportunity cost to Jonathan of making a bird house is 1/3 bird feeder.

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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