Exam 3: Interdependence and the Gains From Trade

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by

Differences in opportunity cost allow for gains from trade.

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?

Table 3-31 -Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of meat is

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

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is

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. Assume that Brad and Theresa each has 60 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is

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?

Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-5. If Hosne and Merve each divides her time equally between making purses and making wallets, then total production is

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

Which of the following is not correct?

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. The opportunity cost of 1 pound of pork for the farmer is

Table 3-31 -Refer to Table 3-31. For the rancher, the opportunity cost of 16 pounds of meat is

Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy. Which of the following combinations of pies and tarts could Maxine not then consume, assuming Maxine specializes in making pies and Daisy specializes in making tarts?

Figure 3-5 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-5. If Hosne must work 0.5 hour to make each purse, then her production possibilities frontier is based on how many hours of work?

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

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 mixer for Maya is

Figure 3-9 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together make in a given 2- day production period?

If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Figure 3-22 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?