Question 1

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

Accepted Answer

A)  Is it possible for specialization and trade to benefit more than one party to a trade? 
B)  Is it possible for specialization and trade to increase total output of traded goods? 
C)  Do opportunity costs play a role in people's decisions to specialize in certain activities? 
D)  What determines the price at which trade takes place? 
A)  Is it possible for specialization and trade to benefit more than one party to a trade? 
B)  Is it possible for specialization and trade to increase total output of traded goods? 
C)  Do opportunity costs play a role in people's decisions to specialize in certain activities? 
D)  What determines the price at which trade takes place?

Question 2

Use the following Figure to answer the question :Figure 3-5
Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier  
-Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse?

Accepted Answer

A)  1/2 hour 
B)  2 hours 
C)  4 hours 
D)  8 hours 
A)  1/2 hour 
B)  2 hours 
C)  4 hours 
D)  8 hours

Question 3

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 30 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 75 units of wheat and 375 units of fish per year while Farmland produces and consumes 375 units of wheat and 75 units of fish per year. If trade were to occur, Boatland would trade 90 units of fish to Farmland in exchange for 80 units of wheat. If Boatland now completely specializes in fish production, how many units of fish could it now consume along with the 80 units of imported wheat?

Accepted Answer

A)  490 units 
B)  500 units 
C)  610 units 
D)  660 units 
A)  490 units 
B)  500 units 
C)  610 units 
D)  660 units

Question 5

What does a consumption possibilities frontier represent?

Accepted Answer

The combinations of

Question 6

Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.

Accepted Answer

A)  Susan has an absolute advantage over Paul in washing windows. 
B)  Susan has a comparative advantage over Paul in washing windows. 
C)  Paul has a comparative advantage over Susan in ironing shirts. 
D)  All of the above are correct. 
A)  Susan has an absolute advantage over Paul in washing windows. 
B)  Susan has a comparative advantage over Paul in washing windows. 
C)  Paul has a comparative advantage over Susan in ironing shirts. 
D)  All of the above are correct.

Question 7

Use the following Table to answer the question : Table 3-16
The following table contains some production possibilities for an economy for a given month.
  
-Refer to Table 3-16. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  200. 
B)  300. 
C)  400. 
D)  500. 
A)  200. 
B)  300. 
C)  400. 
D)  500.

Question 8

Use the following Table to answer the question : Table 3-31
 
-Refer to Table 3-31. In 10 hours,

Accepted Answer

A)  the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes. 
B)  the rancher could produce 1.0 pound of meat and 1.0 pound of potatoes. 
C)  the farmer could produce 0.25 pounds of meat and 1.6 pounds of potatoes. 
D)  the farmer could produce 0.75 pounds of meat and 1.25 pounds of potatoes. 
A)  the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes. 
B)  the rancher could produce 1.0 pound of meat and 1.0 pound of potatoes. 
C)  the farmer could produce 0.25 pounds of meat and 1.6 pounds of potatoes. 
D)  the farmer could produce 0.75 pounds of meat and 1.25 pounds of potatoes.

Question 9

Use the following Table to answer the question : Table 3-7
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
  
-Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?

Accepted Answer

A)  1 pound of meat and 8 pounds of potatoes. 
B)  2 pounds of meat and 2 pounds of potatoes. 
C)  1 pounds of meat and 5 pounds of potatoes. 
D)  3 pounds of meat and 2 pounds of potatoes. 
A)  1 pound of meat and 8 pounds of potatoes. 
B)  2 pounds of meat and 2 pounds of potatoes. 
C)  1 pounds of meat and 5 pounds of potatoes. 
D)  3 pounds of meat and 2 pounds of potatoes.

Question 10

Use the following Table to answer the question : Table 3-20
Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.
  
-Refer to Table 3-20. What is Brad's opportunity cost of producing one bushel of wheat?

Accepted Answer

A)  5/6 pound of beef 
B)  6/5 pounds of beef 
C)  3/5 pounds of beef 
D)  5/3 pounds of beef 
A)  5/6 pound of beef 
B)  6/5 pounds of beef 
C)  3/5 pounds of beef 
D)  5/3 pounds of beef

Question 11

Use the following Table to answer the question : Table 3-15
 
-Refer to Table 3-15. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Accepted Answer

A)  5 pounds of meat and 4 pounds of potatoes. 
B)  6 pounds of meat and 7.5 pounds of potatoes. 
C)  7.5 pounds of meat and 6 pounds of potatoes. 
D)  10 pounds of meat and 8 pounds of potatoes. 
A)  5 pounds of meat and 4 pounds of potatoes. 
B)  6 pounds of meat and 7.5 pounds of potatoes. 
C)  7.5 pounds of meat and 6 pounds of potatoes. 
D)  10 pounds of meat and 8 pounds of potatoes.

Question 12

Use the following scenario to answer the question : Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities Catherine's Production Possibilities
    
-Refer to Scenario 3-1. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Accepted Answer

Yes. Greg has a comparative ad

Question 13

Use the following Table to answer the question : Table 3-11
Assume that Max and Min can switch between producing mittens and producing hats at a constant rate.
  
-Refer to Table 3-11. Assume that Max and Min each has 36 labor hours available. If each person divides his/her time equally between the production of mittens and hats, then total production is

Accepted Answer

A)  18 mittens and 6 hats. 
B)  18 mittens and 7.5 hats. 
C)  16 mittens and 12 hats. 
D)  36 mittens and 15 hats. 
A)  18 mittens and 6 hats. 
B)  18 mittens and 7.5 hats. 
C)  16 mittens and 12 hats. 
D)  36 mittens and 15 hats.

Question 14

Use the following Figure to answer the question : 
Figure 3-14
Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier
  
-Refer to Figure 3-14. At which of the following prices would both Arturo and Dina gain from trade with each other?

Accepted Answer

A)  12 burritos for 21 tacos 
B)  12 burritos for 27 tacos 
C)  12 burritos for 36 tacos 
D)  Arturo and Dina could not both gain from trade with each other at any price. 
A)  12 burritos for 21 tacos 
B)  12 burritos for 27 tacos 
C)  12 burritos for 36 tacos 
D)  Arturo and Dina could not both gain from trade with each other at any price.

Question 15

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. India's opportunity cost of producing rice is

Accepted Answer

A)  1/2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice. 
B)  1/2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice. 
C)  2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice. 
D)  2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice. 
A)  1/2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice. 
B)  1/2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice. 
C)  2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice. 
D)  2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.

Question 16

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes. It takes Zach 1.5 hours to change the oil in the car. For Zach to have a comparative advantage changing the oil it must take him more than minutes to do the dishes.

Accepted Answer

The answer of It takes Heather 1 hour to change...

Question 17

Which of the following is not correct?

Accepted Answer

A)  The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. 
B)  The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. 
C)  The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. 
D)  The gains from specialization and trade are based not on comparative advantage but on absolute advantage. 
A)  The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. 
B)  The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. 
C)  The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. 
D)  The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

Question 18

Use the following Table to answer the question : Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
  
-Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Accepted Answer

A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor. 
A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor.

Question 19

Which of the following is not a reason people choose to depend on others for goods and services?

Accepted Answer

A)  to improve their lives 
B)  to allow them to enjoy a greater variety of goods and services 
C)  to consume more of each good without working any more hours 
D)  to allow people to produce outside their production possibilities frontiers 
A)  to improve their lives 
B)  to allow them to enjoy a greater variety of goods and services 
C)  to consume more of each good without working any more hours 
D)  to allow people to produce outside their production possibilities frontiers

Question 20

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Accepted Answer

A) True 
 B)False

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

Use the following Figure to answer the question :Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse?

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

What does a consumption possibilities frontier represent?

Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.

Use the following Table to answer the question : Table 3-16 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-16. If the production possibilities frontier is bowed outward, then "?" could be

Use the following Table to answer the question : Table 3-31 -Refer to Table 3-31. In 10 hours,

Use the following Table to answer the question : Table 3-7 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?

Use the following Table to answer the question : Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. What is Brad's opportunity cost of producing one bushel of wheat?

Use the following Table to answer the question : Table 3-15 -Refer to Table 3-15. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Use the following Figure to answer the question : Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. At which of the following prices would both Arturo and Dina gain from trade with each other?

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. India's opportunity cost of producing rice is

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes. It takes Zach 1.5 hours to change the oil in the car. For Zach to have a comparative advantage changing the oil it must take him more than minutes to do the dishes.

Which of the following is not correct?

Use the following Table to answer the question : Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Which of the following is not a reason people choose to depend on others for goods and services?

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 3: Interdependence and the Gains From Trade

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

Use the following Figure to answer the question :Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse?

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

What does a consumption possibilities frontier represent?

Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.

Use the following Table to answer the question : Table 3-16 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-16. If the production possibilities frontier is bowed outward, then "?" could be

Use the following Table to answer the question : Table 3-31 -Refer to Table 3-31. In 10 hours,

Use the following Table to answer the question : Table 3-7 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?

Use the following Table to answer the question : Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. What is Brad's opportunity cost of producing one bushel of wheat?

Use the following Table to answer the question : Table 3-15 -Refer to Table 3-15. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Use the following Figure to answer the question : Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. At which of the following prices would both Arturo and Dina gain from trade with each other?

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. India's opportunity cost of producing rice is

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes. It takes Zach 1.5 hours to change the oil in the car. For Zach to have a comparative advantage changing the oil it must take him more than minutes to do the dishes.

Which of the following is not correct?

Use the following Table to answer the question : Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Which of the following is not a reason people choose to depend on others for goods and services?

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters