Exam 3: Interdependence and the Gains From Trade

Figure 3-8 -Refer to Figure 3-8. Chile should specialize in the production of

Table 3-11 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-11. Falda has a comparative advantage in the production of

Adam Smith developed the theory of comparative advantage as we know it today.

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 pitcher of lemonade?

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. The rancher has a comparative advantage in the production of

Unless two people who are producing two goods have exactly the same opportunity costs, then one person will have a comparative advantage in one good, and the other person will have a comparative advantage in the other good.

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. Which of the following combinations of wheat and beef could Zardia not produce in one 10-hour day?

Figure 3-4 -Refer to Figure 3-4. Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production?

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. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring airplanes along the horizontal axis, then

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. Which of the following combinations of meat and potatoes could the rancher not produce in 24 hours?

Table 3-12 -Refer to Table 3-1. For the farmer, the opportunity cost of 15 pounds of meat is

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

An assumption of the production possibilities frontier model is that technology is fixed.

Figure 3-9 -Refer to Figure 3-9. Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan. Which of the following combinations of bolts and nails could Uzbekistan then consume, assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?

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's opportunity cost of testing one cellular phone is programming

If Shawn can produce donuts at a lower opportunity cost than Sue, then

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. Without trade, England produced and consumed 32 units of cheese and 2 units of bread and Spain produced and consumed 6 units of cheese and 2 units of bread. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 7 units of cheese for 2.5 units of bread. As a result, England gained

Table 3-6 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-6. Maya should specialize in the production of

The production possibilities frontier illustrates