Exam 3: Interdependence and the Gains From Trade

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 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

The opportunity cost of an item is

Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. What is Theresa's opportunity cost of producing one bushel of wheat?

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Table 3-15 -Refer to Table 3-15. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?

Harry is a computer company executive, earning $200 per hour managing the company and promoting its products. His daughter Quinn is a high school student, earning $6 per hour helping her grandmother on the farm. Harry's computer is broken. He can repair it himself in one hour. Quinn can repair it in 10 hours. Harry's opportunity cost of repairing the computer is lower than Quinn's.

Table 3-32 US and French Production Opportunities -Refer to Table 3-32 France has an absolute advantage in the production of

Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible?

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Table 3-41 -Refer to Table 3-41. What is England's opportunity cost of one compass?

Total output in an economy increases when each person specializes because

Table 3-9 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-9. Which of the following combinations of mixers and toasters could Maya produce in 60 hours?

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. The opportunity cost of 1 novel for Jordan is

Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

Table 3-31 -Refer to Table 3-31. For the farmer, 12.8 pounds of

The gains from specialization and trade are based on advantage.

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. The opportunity cost of 1 mixer for Maya is

Table 3-17 The following table contains some production possibilities for an economy for a given year. -Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be