Exam 3: Interdependence and the Gains From Trade

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 rancher has an absolute advantage in the production of

If Korea is capable of producing either shoes or soccer balls or some combination of the two,then

Differences in opportunity cost allow for gains from trade.

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan should specialize in the production of

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

Figure 3-4 -Refer to Figure 3-4.If the production possibilities frontiers shown are each for one year of writing,then which of the following combinations of novels and poems could Perry and Jordan together write in a given year?

When each person specializes in producing the good in which he or she has a comparative advantage,total production in the economy

Table 3-9 Barb and Jim run a business that sets up and tests computers.Assume that Barb and Jim can switch between setting up and testing computers at a constant rate.The following table applies. -Refer to Table 3-9.Which of the following points would not be on Jim's production possibilities frontier,based on a 40-hour week?

Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10.If point A represents Alice's current production and point B represents Betty's current production,under what circumstances can both Alice and Betty benefit from specialization and trade?

Table 3-9 Barb and Jim run a business that sets up and tests computers.Assume that Barb and Jim can switch between setting up and testing computers at a constant rate.The following table applies. -Refer to Table 3-9.Barb has an absolute advantage in

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.Based on this information,if Bonovia and Cropitia want to trade,Bonovia should specialize in the production of

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Suppose Korea decides to increase its production of cars by 18.What is the opportunity cost of this decision?

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 mixers along the horizontal axis,then

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.

Suppose there are only two people in the world.Each person's production possibilities frontier also represents his or her consumption possibilities when

Figure 3-8 -Refer to Figure 3-8.Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

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.If the production possibilities frontier shown is for 240 hours of production,then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours?

An assumption of the production possibilities frontier model is that technology is fixed.