Exam 3: Interdependence and the Gains From Trade

Opportunity cost measures the trade-off between two goods that each producer faces.

Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

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. If the US exports semiconductors to Mexico and imports auto parts from Mexico,

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pizza?

Figure 3-6 -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5. The opportunity cost of 1 unit of cheese for England is

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

An economy's production possibilities frontier is also its consumption possibilities frontier

Figure 3-9 -Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production 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. Assume that Andia and Zardia each has 60 minutes available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is

If a country has a lower opportunity cost than its potential trading partner, the country should decide to be self-sufficient.

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

International trade can make some individuals within a country worse off, even as it makes the country as a whole better off.

Table 3-18 Chris and Tony's Production Opportunities -By definition, exports are

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. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by

Table 3-18 Chris and Tony's Production Opportunities -By definition, imports are

For international trade to benefit a country, it must benefit all citizens of that country.

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 should specialize in the production of

Figure 3-6 -Refer to Figure 3-6. Maxine has an absolute advantage in the production of