Exam 3: Interdependence and the Gains From Trade

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of

If labor in Mexico is less productive than labor in the United States in all areas of production,

Zora can produce 4 quilts in a week and she can produce 1 corporate website in a week. Lou can produce 9 quilts in a week and he can produce 2 corporate websites in a week. Zora has the comparative advantage in quilts and the absolute advantage in neither good, while Lou has the comparative advantage in corporate websites and the absolute advantage in both goods.

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

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. Which of the following points would not be on Max's production possibilities frontier, based on a 36-hour production period?

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. Maxine has an absolute advantage in the production of

By definition, imports are

Use the following Table to answer the question : Table 3-41 -Refer to Table 3-41. If the two countries decide to trade with each other, which country should specialize in producing radios?

Suppose that Venezuela produces beef and oil and it can switch production between each at a constant rate. If the most beef it can produce is 300 million pounds and the most oil it can produce is 50 million barrels, then what is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil?

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. Brad should specialize in the production of

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Absolute advantage is found by comparing different producers'

Use the following Figure to answer the question :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. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours?

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's opportunity cost of one pound of soybeans is

Opportunity cost refers to how many inputs a producer requires to produce a good.

Use the following Figure to answer the question : Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Azerbaijan's opportunity cost of one bolt is

Use the following Figure to answer the question : Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision?

Use the following Table to answer the question : Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. -Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of pork for 2 pounds of tomatoes, then

Use the following Figure to answer the question :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. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours?