Exam 3: Interdependence and the Gains From Trade: Part A

Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1.What is Greg's opportunity cost of producing ice cream? Explain how you derived your answer.

Country A and country B both produce shirts and shorts.Country B has an absolute advantage producing both shirts and shorts.Is there any condition under which the two countries could gain from trade?

Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1.Which if any good(s)does Greg have an absolute advantage producing?

Define absolute advantage.

Define comparative advantage.

Scenario 3-2 In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli. -Refer to Scenario 3-2.Give a range of prices in terms of pounds of rice per pound of broccoli at which the two countries would be both be willing to trade.

With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of peas.With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas.Can Elmer and Bugs gain from trade? Defend your answer.

Under what conditions is an economy's production possibilities frontier also its consumption possibilities frontier?

Frank can make 20 hot dogs an hour or 10 pints of potato salad an hour.Earnest can make 30 hot dogs an hour or 20 pints of potato salad an hour.Who has the comparative advantage making hot dogs and who has the comparative advantage making potato salad?

Jennifer takes 2 hours to make a loaf of bread and 1 hour to make a dozen cookies.Janet takes 3 hours to make a loaf of bread and 3/4 hours to make a dozen cookies.Who,if either,has an absolute advantage baking bread? Who,if either,has an absolute advantage making cookies?

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26.What is Mary's opportunity cost of one muffin?

Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1.Which if any good(s)does Catherine have an absolute advantage producing?

Charlotte can produce pork and beans and can switch between producing them at a constant rate.If it takes her 10 hours to produce a pound of pork and 5 hours to produce a pound of beans,what is her opportunity cost of pork and what is her opportunity cost of beans?

Sally can make 8 cups of soup per hour or 20 crackers per hour.Harry can make 10 cups of soup per hour or 30 crackers per hour.Can Sally and Harry gain from trade? If so,what is the range of prices of crackers for soup at which they would both find trade advantageous?

Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1.What is Greg's opportunity cost of producing cake? Explain how you derived your answer.

Explain the difference between absolute advantage and comparative advantage.Which is more important in determining trade patterns,absolute advantage or comparative advantage? Why?

Scenario 3-2 In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli. -Refer to Scenario 3-2.Which country,if either,has a comparative advantage producing broccoli? Defend your answer using the numbers given.

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26.Who has a comparative advantage in making muffins?

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes.It takes Zach 1.5 hours to change the oil in the car.For Zach to have a comparative advantage changing the oil it must take him more than ------ minutes to do the dishes.

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26.Who has a comparative advantage in making cookies?