Exam 3: Interdependence and the Gains From Trade

Table 3-2 ​ -Refer to Table 3-2.What does each producer have an absolute advantage in?

Figure 3-4 -Refer to Figure 3-4.What does each of the two producers have a comparative or absolute advantage in?

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 3-3 ​ -Refer to Table 3-3.What is the opportunity cost of one blanket for Amy?

Figure 3-6 These figures illustrate the production possibilities available to Barney and Betty with eight hours of labour in their bakery. -Refer to Figure 3-6.Who has a comparative advantage in each product?

Gary and Diane must prepare a presentation for their marketing class.As part of their presentation,they must do a series of calculations and prepare 50 PowerPoint slides.It would take Gary 10 hours to do the required calculations and 10 hours to prepare the slides.It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides. a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? c.If Diane and Gary have the same opportunity cost of $5 per hour,is there a better solution than for each to specialize in calculating or preparing slides?

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

It takes Russell 6 hours to produce a bushel of corn and 2 hours to wash and polish a car.It takes Wilma 6 hours to produce a bushel of corn and 1 hour to wash and polish a car.Wilma and Russell cannot gain from specialization and trade,since it takes each of them 6 hours to produce 1 bushel of corn.

Table 3-1 -Refer to Table 3-1.What does each producer have a comparative advantage in?

Table 3-2 ​ -Refer to Table 3-2.What does each producer have an absolute or comparative advantage in?

Table 3-5 ​ -Refer to Table 3-5.What is the opportunity cost of one car for Canada?

How is absolute advantage found?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.What does each of the two producers have a comparative advantage in?

Figure 3-4 -Refer to Figure 3-4.What does each of the two producers have an absolute advantage in?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.Suppose that Ben and Jerry have both decided to produce at point A on their production possibilities frontiers.What can we infer from this information?

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 50 bushels of corn and 500 bushels of oats.Combined output for the two countries would therefore be 450 bushels of corn and 600 bushels of oats.If the two countries do trade,each will completely specialize in producing the crop for which it has a comparative advantage.If trade occurs,by what amount will the combined output for the two countries increase?

Suppose it takes a Chinese worker 2 hours to produce a ceramic pot,and 20 hours to produce a tablecloth.Suppose that it takes a Canadian worker 2 hours to produce a ceramic pot and 10 hours to produce a tablecloth.It will benefit China to produce extra pots and export them to Canada in return for imported Canadian tablecloths.

Figure 3-4 -Refer to Figure 3-4.What does each of the two producers have a comparative advantage in?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.Who has a comparative or absolute advantage in what product?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.For Jerry,what is the opportunity cost of 1 kg of cones?