Exam 3: Interdependence and the Gains From Trade

Table 3-4 -Refer to Table 3-4. What is the opportunity cost of 1 birdhouse for Alberta?

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

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

Table 3-3 -Refer to Table 3-3. How could Helen and Carolyn both benefit?

When will a production possibilities frontier be linear and not bowed out?

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. 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. Then suppose that trade is initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. What maximum amounts will Freedonia now be able to consume?

Table 3-1 -Refer to Table 3-1. What is the opportunity cost of 1 kg of meat for the Rancher?

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

According to Adam Smith, what should a person never attempt to make at home?

Table 3-4 -Refer to Table 3-4. What is the opportunity cost of 1 basket for Alberta?

As long as two people have different opportunity costs, each can gain from trade by being able to obtain a good at a price lower than his or her opportunity cost.

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade, which of the following is correct?

For what reason does total output in an economy increase when each person specializes?

Suppose that a worker in Taiwan can make 2 TVs or 10 pairs of shoes per week, and a worker in Korea can make 3 TVs or 20 pairs of shoes per week. a.In what sense do TVs and shoes cost less in Korea than in Taiwan? b.In what sense do TVs cost less in Taiwan than in Korea? c.If Taiwan and Korea were to engage in trade, which country would export which good? d.How would the answer to the above question change if a worker in Korea could make 4 TVs per week?

Suppose a producer requires a smaller quantity of inputs to produce a good. Which of the following is correct?

Mark is a computer company executive, and earns $200 per hour managing the company and promoting its products. His daughter Regan is a high school student, and earns $6 per hour helping her grandmother on the farm. Mark's computer is broken. He can repair it himself in one hour. Regan can repair it in 10 hours. Mark has a comparative advantage repairing the computer.

Which of the following is correct? Trade

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

Julia can fix a meal in 1 hour, and her opportunity cost of 1 hour is $50. Jacque can fix the same kind of meal in 2 hours, and his opportunity cost of 1 hour is $20. Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.

Table 3-5 -Refer to Table 3-5. What is the opportunity cost of 1 airplane for Japan?