Exam 3: Interdependence and the Gains From Trade

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

Production possibilities frontiers cannot be used to illustrate tradeoffs.

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

Figure 3-10 -Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade?

Table 3-11 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-11. Varick has an absolute advantage in the production of

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

Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 cup for Juba is

Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia switch from each country dividing its time equally between the production of coffee and soybeans to each country spending all of its time producing the good in which it has a comparative advantage, then total production of soybeans will increase by

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. Juanita's opportunity cost of testing one cellular phone is programming

Which of the following would not result from all countries specializing according to the principle of comparative advantage?

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 in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

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. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pizza?

Figure 3-6 -Refer to Figure 3-6. Maxine has an absolute advantage in the production of

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. Which of the following combinations of wheat and beef could Andia produce in one 8-hour day?

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5. England should export

Trade allows all countries to achieve greater prosperity.

Figure 3-4 -Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of writing, then which of the following combinations of novels and poems could Perry and Jordan together write in a given year?

Figure 3-4 -Refer to Figure 3-4. The opportunity cost of 1 poem for Jordan is

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by