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, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 table is

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

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 a comparative advantage in the production of

Figure 3-5 -Refer to Figure 3-5. At which of the following prices would both Hosne and Merve gain from trade with each other?

Assume for the United States that the opportunity cost of each airplane is 100 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

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. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume

Consider two individuals - Howard and Mai - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Howard and Mai are least obvious in which of the following cases?

International trade can make some individuals within a country worse off, even as it makes the country as a whole better off.

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

Figure 3-6 -Refer to Figure 3-6. Suppose Daisy decides to increase her production of pies by 6. What is the opportunity cost of this decision?

If one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well.

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 not write in a given year?

Figure 3-3 -Refer to Figure 3-3. If Arturo and Dina both spend all of their time producing tacos, then total production is

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 has a comparative 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. Assume that Andia and Zardia each has 60 minutes available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is

Figure 3-3 -Refer to Figure 3-3. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 10 workers in each country. Political pressure from the fish lobby in Farmland and from the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland. As a result, Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year. If the political pressure were overcome and trade were to occur, each country would completely specialize in the product in which it has a comparative advantage. If trade were to occur, the combined output of the two countries would increase by

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, Ellie has a comparative advantage in the production of ice cream.

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?