Exam 3: Interdependence and the Gains From Trade

Table 3-5 -Refer to Table 3-5. If Japan and Canada trade based on the principle of comparative advantage, which of the following is correct?

Table 3-5 -Refer to Table 3-5. How could Canada and Japan both benefit?

Figure 3-5 -Refer to Figure 3-5. Ginger has an absolute advantage in

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. For many years the two countries traded, each completely specializing in producing the grain for which it has a comparative advantage. Now, however, war has broken out between them and all trade has stopped. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. By how much has the combined yearly output of the two countries declined?

Figure 3-4 -Refer to Figure 3-4. For Jerry, what is the opportunity cost of 1 bottle of wine?

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Figure 3-6 -Refer to Figure 3-6. Which of the following is correct?

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 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 pressures were overcome and trade were to occur, each country would completely specialize in the product for which it has a comparative advantage. If trade were to occur, by how much would the combined output of the two countries increase?

Table 3-2 -Refer to Table 3-2. Which of the following is correct?

Table 3-4 -Refer to Table 3-4. If Alberta and Manitoba trade based on the principle of comparative advantage, what will be exported?

Figure 3-4 -Refer to Figure 3-4. For Ben, the opportunity cost of 1 bottle of beer is

Figure 3-1 -Refer to Figure 3-1. Assume that both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they were the only producers of corn and wheat, what would the total production of wheat and corn be?

Table 3-6 -Refer to Table 3-6. What is the opportunity cost of 1 unit of bread in England?

Table 3-3 -Refer to Table 3-3. What is the opportunity cost of 1 quilt for Carolyn?

What is the term for a good that is produced abroad and sold domestically?

Table 3-1 -Refer to Table 3-1. Which of the following is correct?

Figure 3-3 Ice cream is measured in kilograms. -Refer to Figure 3-3. For Ben, what is the opportunity cost of 1 kg of ice cream?

Figure 3-1 -Refer to Figure 3-1. Which of the following is true for Cliff and Paul?

Figure 3-5 -Refer to Figure 3-5. Ginger should specialize in

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, and so would not engage in foreign trade. From an economic perspective, when would this idea make sense?