Exam 3: Interdependence and the Gains From Trade

In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

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. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is

Table 3-12 -Refer to Table 3-1. For the farmer, 12.8 pounds of

Figure 3-8 -Refer to Figure 3-8. Colombia should specialize in the production of

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. Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for

Figure 3-6 -Refer to Figure 3-6. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision?

Figure 3-4 -Refer to Figure 3-4. If Jordan must work 3 months to write each novel, then her production possibilities frontier is based on how many months of work?

Table 3-12 -Refer to Table 3-1. For the farmer, the opportunity cost of 15 pounds of meat is

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

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. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to

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

Table 3-6 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-6. The opportunity cost of 1 toaster for Miguel is

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

Figure 3-8 -Refer to Figure 3-8. Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. Which of the following prices would result in an mutually advantageous trade for Alice and Betty?

Total output in an economy increases when each person specializes because

Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-4. The opportunity cost of 1 pound of meat for the farmer is

Table 3-6 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-6. The opportunity cost of 1 toaster for Maya is

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. Zimbabwe has an absolute advantage in the production of

Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides. a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides?