Exam 3: Interdependence and the Gains From Trade

Use the following Figure to answer the question :Figure 3-10 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

Specialization and trade are closely linked to

Use the following Table to answer the question : Table 3-3 Production Opportunities -Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

Use the following Table to answer the question : table 3-14 : Assume that Nick and Faldo can switch between producing wheat and producing cloth at a constant rate. Refer to Table 3-14. Assume that Nick and Faldo each has 2 hours available. If each person divides his time equally between the production of wheat and cloth, then total production is

When a country has a comparative advantage in producing a certain good,

Use the following Figure to answer the question :Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Use the following Figure to answer the question : Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has a comparative advantage in the production of

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Use the following Figure to answer the question : Figure 3-25 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-25. Chile should specialize in the production of

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.

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Use the following scenario to answer the question : 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.

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

Use the following Figure to answer the question : Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. Daisy has an absolute advantage in the production of

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

Use the following Table to answer the question : Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is

Use the following Table to answer the question : Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?

Use the following Figure to answer the question :Figure 3-8 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of pounds of coffee and pounds of soybeans could Chile and Colombia together not make in a given day?

Use the following Figure to answer the question : Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile has an absolute advantage in the production of