Exam 3: Interdependence and the Gains From Trade

Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

If a country has a lower opportunity cost than its potential trading partner, the country should decide to be self- sufficient.

Table 3-39 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-39. Japan should specialize in the production of

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?

Economists use the term to refer to the ability to produce a good at a lower opportunity cost than another producer.

Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If Lisa and Bryce both spend all of their time producing jackets, then total production is

Table 3-8 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-8. Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is

Table 3-9 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-9. Which of the following combinations of mixers and toasters could Maya produce in 60 hours?

Figure 3-3 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-3. If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. At which of the following prices would both Chile and Colombia gain from trade with each other?

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 Greg's opportunity cost of producing ice cream? Explain how you derived your answer.

For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two opportunity costs.

Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Japan has an absolute advantage in the production of

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?

Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours.

If a person chooses self-sufficiency, then she can only consume what she produces.

Table 3-38 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-38. Spain should export

Define absolute advantage.

Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Without trade, Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes. As a result, Japan gained