Exam 3: Interdependence and the Gains From Trade

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. Mexico would incur an opportunity cost of 8 units of Good X if it increased its production of Good Y by

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. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo. Which of the following combinations of tacos and burritos could Dina then consume, assuming Dina specializes in taco production and Arturo specializes in burrito production?

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 coffee is

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. What is Catherine's opportunity cost of producing cake? Explain how you derived your answer.

Table 3-2 Assume that England and Holland can switch between producing milk and oats at a constant rate. -Refer to Table 3-2. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Holland. If we were to do this, measuring milk along the horizontal axis, then

Figure 3-7 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together make in a given 4-hour production period?

Table 3-41 -Refer to Table 3-41. Which country has an absolute advantage in producing radios?

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. The opportunity cost of 1 novel for Jordan is

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 pizza?

Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-27. Min has an absolute advantage in the production of

It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6 hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Azerbaijan's opportunity cost of one nail is

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers. Alpha's Production Possibilities Frontier Omega's Production Possibilities Frontier a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A. b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts? c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now? d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the graphs the gain each country would receive from trade. Label these points B.

Charlotte can produce pork and beans and can switch between producing them at a constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce a pound of beans, what is her opportunity cost of pork and what is her opportunity cost of beans?

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. If Bintu and Juba switch from each person dividing her time equally between the production of cups and bowls to each person spending all of her time producing the good in which she has a comparative advantage, then total production will increase by

Table 3-32 US and French Production Opportunities -Refer to Table 3-32 France has an absolute advantage in the production of

Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. -Refer to Table 3-21. At which of the following prices would both Jamaica and Norway gain from trade with each other?

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, Ellie has a comparative advantage in the production of ice cream.

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.