Exam 3: Interdependence and the Gains From Trade

A person can benefit from specialization and trade by obtaining a good at a price that is

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. What is Andia's opportunity cost of producing one bushel of wheat?

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

The gains from specialization and trade are based on absolute advantage.

Suppose Hank and Tony can both produce corn. If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn.

Figure 3-9 -Refer to Figure 3-9. If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails, then

Table 3-18 Chris and Tony's Production Opportunities -Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. Also suppose the US has an absolute advantage in the production of both semiconductors and auto parts. The US should

Assume for the United States that the opportunity cost of each airplane is 100 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

Table 3-18 Chris and Tony's Production Opportunities -Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

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. Zimbabwe's opportunity cost of one hairbrush is

Table 3-10 Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. -Refer to Table 3-10. Juanita has an absolute advantage in

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. Andia has a comparative advantage in the production of

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 table is

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. Which of the following prices would result in an mutually advantageous trade for Alice and Betty?

Table 3-12 -Refer to Table 3-1. For the rancher, the opportunity cost of 16 pounds of meat is

It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5 hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade.

Table 3-18 Chris and Tony's Production Opportunities -Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following statements is correct?

If one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well.

Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia switch from each country dividing its time equally between the production of coffee and soybeans to each country spending all of its time producing the good in which it has a comparative advantage, then total production of soybeans will increase by