Exam 3: Interdependence and the Gains From Trade

Trade is based on absolute advantage.

Figure 3-4 -Refer to Figure 3-4.What does each of the two producers have a comparative or absolute 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.What is the opportunity cost of one loaf of bread for Barney

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.Then suppose that trade is initiated between the two countries,and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat.What maximum amounts will Freedonia now be able to consume

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

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

What are imports

Table 3-1 -Refer to Table 3-1.What is the opportunity cost of 1 kg of meat for the rancher

What is David Ricardo known for

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 should Ginger and Fred specialize in

Some countries win in international trade,while other countries lose.

The producer who has the smaller opportunity cost of producing a good is said to have an absolute advantage in producing that good.

When can a country's consumption possibilities frontier be outside its production possibilities frontier

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 Fred

What should a country do if it has a comparative advantage in a product

Figure 3-1 -Refer to Figure 3-1.Assume that both Paul and Cliff divide their time equally between the production of corn and wheat,and they do not trade.If they were the only producers of corn and wheat,what would the total production of wheat and corn be

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world.Its ruler proclaimed that Xenophobia should become self-sufficient and so would not engage in foreign trade.From an economic perspective,when would this idea make sense

Figure 3-4 -Refer to Figure 3-4.For Ben,what is the opportunity cost of one bottle of wine

Julia can fix a meal in one hour,and her opportunity cost of one hour is $50.Jacque can fix the same kind of meal in two hours,and his opportunity cost of one hour is $20.Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals Explain.

Table 3-5 -Refer to Table 3-5.What is the opportunity cost of one airplane for Japan