Exam 3: Interdependence and the Gains From Trade

Table 3-10 Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. -Refer to Table 3-10. Which of the following points would be on Shantala's production possibilities frontier, based on a 40-hour week?

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

The gains from specialization and trade are based on absolute advantage.

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, then

People who provide you with goods and services

Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make than to buy.

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Adam Smith asserted that a person should never attempt to make at home

A country that currently does not trade with other countries could benefit by

Figure 3-8 -Refer to Figure 3-8. At which of the following prices would both Chile and Colombia gain from trade with each other?

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2. Aruba and Iceland would not be able to gain from trade if Iceland's opportunity cost of one radio changed to

Figure 3-8 -Refer to Figure 3-8. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Figure 3-4 -Refer to Figure 3-4. Perry has an absolute advantage in the production of

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?

Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 bowl for Bintu is

The gains from trade are

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring airplanes along the horizontal axis, then

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar. Which of the following combinations of emeralds and rubies could Peru then consume, assuming Peru specializes in emerald production?

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision?

Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. -Refer to Figure 3-11. In the nation of Cropitia, the opportunity cost of a pound of cheese is 1.5 pounds of ham. Based on this information, if Bonovia and Cropitia want to trade, Cropitia should specialize,in the production of