Exam 3: Interdependence and the Gains From Trade

Figure 3-6 -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

The most obvious benefit of specialization and trade is that they allow us to

Table 3-18 Chris and Tony's Production Opportunities Tomatores Patta Sauce Chris 10 300 jars Tony 14 280 -Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is

Figure 3-7 -Refer to Figure 3-7. If the production possibilities frontier shown for Juba is for 2 hours of work, then how long does it take Juba to make one bowl?

Which famous economist developed the principle of comparative advantage as we know it today?

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 pitcher of lemonade?

Adam Smith

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 an absolute advantage in the production of

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. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring toasters along the horizontal axis, then

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. The opportunity cost of 1 unit of bread for England is

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for one month of production, then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Figure 3-1 -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

Figure 3-3 -Refer to Figure 3-3. Without trade, Arturo produced and consumed 240 tacos and 120 burritos and Dina produced and consumed 100 tacos and 150 burritos. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. As a result, Arturo gained

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.

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 360 minutes available. If each person divides his time equally between the production of wheat and beef, then total production is

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. At which of the following prices would both Andia and Zardia gain from trade with each other?

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