Exam 3: Interdependence and the Gains From Trade

Figure 3-7 -Refer to Figure 3-7. If Bintu and Juba both spend all of their time making bowls, then total production is

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, Cropitia should specialize,in the production of

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. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if

Table 3-12 -Refer to Table 3-1. Relative to the farmer, the rancher has an absolute advantage in the production of

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 ham is 0.3 pounds of cheese. Bonovia and Cropitia both can gain from trading with one another if one pound of ham trades for

Specialization and trade are closely linked to

Table 3-18 Chris and Tony's Production Opportunities -Goods produced abroad and sold domestically are called

Opportunity cost refers to how many inputs a producer requires to produce a good.

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 calculation 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?

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?

Table 3-12 -Refer to Table 3-1. For the rancher, the opportunity cost of 1 pound of meat is

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. Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision?

Table 3-18 Chris and Tony's Production Opportunities -A country that currently does not trade with other countries could benefit by

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

Table 3-18 Chris and Tony's Production Opportunities -Tom Brady should probably not mow his own lawn because

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Figure 3-5 -Refer to Figure 3-5. If Hosne and Merve both spend all of their time making wallets, then total production is