Exam 3: Interdependence and the Gains From Trade

Janet and Patricia work for a home cleaning company and they form a team.In each room,there are two broad cleaning areas: floor and windows.Janet can do a floor in 40 minutes and windows in 25 minutes.Patricia does floors in 30 minutes and windows in 30 minutes. a.How long does it take to clean an apartment with 4 rooms if Janet takes 2 rooms and Patricia takes 2 rooms,assuming that if one finishes earlier she takes a break waiting for the other? b.Later on,they decide that if one finishes earlier she would help the other to finish so that they can move on to another client.How long does it take now to finish? c.After a while,they realize that it is better if one does the floors in all rooms and the other does the windows.How long does it take now?

Table 3-6 ​ -Refer to Table 3-5.Which country has an absolute advantage in each product?

Table 3-6 ​ -Refer to Table 3-5.What is the opportunity cost of one unit of bread in Denmark?

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

Suppose that a worker in Freedonia can produce either 6 units of corn or 4 units of wheat per year,and a worker in Sylvania can produce either 4 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 20 units of wheat per year.Sylvania produces and consumes 20 units of corn and 30 units of wheat.By how much has the combined yearly output of the two countries declined?

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.What should Fred and Ginger produce?

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 ice cream?

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

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

Table 3-2 ​ -Refer to Table 3-2.What is the opportunity cost of 1 kilogram of meat for the rancher?

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

Table 3-2 ​ -Refer to Table 3-2.What is the opportunity cost of 1 kilogram of potatoes for the rancher?

Table 3-3 ​ -Refer to Table 3-3.How could Kevin and Amy both benefit?

Suppose a producer can produce shirts with lower opportunity cost than jeans.What else do we need to know if we want to determine this producer's comparative advantage?

What are exports?

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

For a country producing two goods,the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Table 3-4 ​ -Refer to the table.What is the opportunity cost of one basket for Manitoba?

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

Trade allows a country to consume outside its production possibilities frontier.