Question 1

Figure 3-6
Maxine’s Production Possibilities Frontier
 
Daisy’s Production Possibilities Frontier

-Refer to Figure 3-6.At which of the following prices would both Maxine and Daisy gain from trade with each other?

Accepted Answer

A)  4 tarts for 2 pies 
B)  8 tarts for 12 pies 
C)  12 tarts for 28 pies 
D)  Maxine and Daisy could not both gain from trade with each other at any price.

Question 2

Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
 
-Refer to Table 3-5.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.

Question 3

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.
Alice’s Production Possibilities Frontier	F 
Betty’s Production Possibilities 
-Refer to Figure 3-10.If point A represents Alice's current production and point B represents Betty's current production,under what circumstances can both Alice and Betty benefit from specialization and trade?

Accepted Answer

A)  Alice produces more pizzas and Betty produces more lemonade. 
B)  Alice produces more lemonade and Betty produces more pizzas. 
C)  Both Alice and Betty produce only pizzas. 
D)  There are no circumstances under which both Alice and Betty can benefit from specialization and trade.

Question 4

Figure 3-4
 Perry’s Production Possibilities Frontier
 Jordan’s Production Possibilities F
-Refer to Figure 3-4.Perry has an absolute advantage in the production of

Accepted Answer

A)  novels and Jordan has an absolute advantage in the production of poems. 
B)  poems and Jordan has an absolute advantage in the production of novels. 
C)  novels and Jordan has an absolute advantage in the production of neither good. 
D)  neither good and Jordan has an absolute advantage in the production of novels.

Question 5

By definition,exports are

Accepted Answer

A)  limits placed on the quantity of goods brought into a country. 
B)  goods in which a country has an absolute advantage. 
C)  people who work in foreign countries. 
D)  goods produced domestically and sold abroad.

Question 6

Figure 3-9
Uzbekistan’s Production Possibilities F 
Azerbaijan’s Production Possibilities Frontier

-Refer to Figure 3-9.Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan.Which of the following combinations of bolts and nails could Uzbekistan then consume,assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?

Accepted Answer

A)  7 bolts and 70 nails 
B)  12 bolts and 56 nails 
C)  17 bolts and 40 nails 
D)  25 bolts and 15 nails

Question 7

With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of peas.With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas.Can Elmer and Bugs gain from trade? Defend your answer.

Accepted Answer

The answer of With eight hours of work Elmer can...

Question 8

Figure 3-8
Chile’s Production Possibilities F 
Colombia’s Production Possibilities Frontier

-Refer to Figure 3-8.Chile has an absolute advantage in the production of

Accepted Answer

A)  coffee and Colombia has an absolute advantage in the production of soybeans. 
B)  soybeans and Colombia has an absolute advantage in the production of coffee. 
C)  both goods and Colombia has an absolute advantage in the production of neither good. 
D)  neither good and Colombia has an absolute advantage in the production of both goods.

Question 9

Figure 3-6
Maxine’s Production Possibilities Frontier
 
Daisy’s Production Possibilities Frontier

-Refer to Figure 3-6.Suppose Maxine decides to increase her production of tarts by 5.What is the opportunity cost of this decision?

Accepted Answer

A)  2/5 pie 
B)  2 pies 
C)  5/2 pies 
D)  10 pies

Question 10

Figure 3-2
Peru's Production Possibilities Frontier 
-Refer to Figure 3-2.Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar.Which of the following combinations of emeralds and rubies could Peru then consume,assuming Peru specializes in emerald production?

Accepted Answer

A)  2 emeralds and 240 rubies 
B)  3 emeralds and 220 rubies 
C)  4 emeralds and 200 rubies 
D)  5 emeralds and 140 rubies

Question 11

Figure 3-4
Perry’s Production Possibilities F 
Jordan’s Production Possibilities F
-Refer to Figure 3-4.If the production possibilities frontiers shown are each for one year of writing,then which of the following combinations of novels and poems could Perry and Jordan together write in a given year?

Accepted Answer

A)  1 novel and 22 poems 
B)  2 novels and 18 poems 
C)  3 novels and 16 poems 
D)  5 novels and 8 poems

Question 12

Figure 3-5
Hosne’s Production Possibilities Frontier
 
Merve’s Production Possibilities Frontier

-Refer to Figure 3-5.Merve should specialize in the production of

Accepted Answer

A)  purses. 
B)  wallets. 
C)  both goods. 
D)  neither good.

Question 13

Figure 3-4
Perry’s Production Possibilities F 
Jordan’s Production Possibilities F
-Refer to Figure 3-4.If the production possibilities frontier shown for Perry is for 6 months of writing,then how long does it take Perry to write one poem?

Accepted Answer

A)  1/3 month 
B)  1/2 month 
C)  2 months 
D)  3 months

Question 14

Figure 3-7
Bintu’s Production Possibilities Frontier	
 Juba’s Production Possibilities F
-Refer to Figure 3-7.If Bintu must work 2 hours to make each cup,then her production possibilities frontier is based on how many hours of work?

Accepted Answer

A)  2 hours 
B)  4 hours 
C)  8 hours 
D)  16 hours

Question 15

Figure 3-9
Uzbekistan’s Production Possibilities F 
Azerbaijan’s Production Possibilities Frontier

-Refer to Figure 3-9.Azerbaijan has an absolute advantage in the production of

Accepted Answer

A)  bolts and a comparative advantage in the production of bolts. 
B)  bolts and a comparative advantage in the production of nails. 
C)  nails and a comparative advantage in the production of bolts. 
D)  nails and a comparative advantage in the production of nails.

Question 16

Figure 3-7
Bintu’s Production Possibilities Frontier
 
Juba’s Production Possibilities Frontier

-Refer to Figure 3-7.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

Accepted Answer

A)  1 bowl and 1 cup. 
B)  2 bowls and 4 cups. 
C)  3 bowls and 5 cups. 
D)  4 bowls and 8 cups.

Question 17

Ben bakes bread and Shawna knits sweaters.Ben and Shawna both like to eat bread and wear sweaters.In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

Accepted Answer

A)  Ben cannot knit sweaters and Shawna cannot bake bread. 
B)  Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters. 
C)  Ben is better than Shawna at baking bread and at knitting sweaters. 
D)  Both Ben and Shawna can benefit from trade in all of the above cases.

Question 18

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.
Alice’s Production Possibilities Frontier	F 
Betty’s Production Possibilities 
-Refer to Figure 3-10.If point A represents Alice's production and point B represents Betty's production,

Accepted Answer

A)  Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
B)  Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas. 
C)  Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. 
D)  Only Alice can benefit from specialization and trade.

Question 19

Figure 3-3
Arturo’s Production Possibilities FrontierF 
Dina’s Production Possibilities 
-Refer to Figure 3-3.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.

Question 20

Table 3-8
Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate.
 
-Refer to Table 3-8.Assume that Huang and Min each has 36 labor hours available.If each person divides his/her time equally between the production of parasols and plates,then total production is

Accepted Answer

A)  18 parasols and 6 plates. 
B)  18 parasols and 7.5 plates. 
C)  16 parasols and 12 plates. 
D)  36 parasols and 15 plates.

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.At which of the following prices would both Maxine and Daisy gain from trade with each other?

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier -Refer to Figure 3-4.Perry has an absolute advantage in the production of

By definition,exports are

With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of peas.With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas.Can Elmer and Bugs gain from trade? Defend your answer.

Figure 3-8 Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier -Refer to Figure 3-8.Chile has an absolute advantage in the production of

Figure 3-6 Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities Frontier -Refer to Figure 3-6.Suppose Maxine decides to increase her production of tarts by 5.What is the opportunity cost of this decision?

Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier -Refer to Figure 3-5.Merve should specialize in the production of

Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier -Refer to Figure 3-4.If the production possibilities frontier shown for Perry is for 6 months of writing,then how long does it take Perry to write one poem?

Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.If Bintu must work 2 hours to make each cup,then her production possibilities frontier is based on how many hours of work?

Figure 3-9 Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier -Refer to Figure 3-9.Azerbaijan has an absolute advantage in the production of

Ben bakes bread and Shawna knits sweaters.Ben and Shawna both like to eat bread and wear sweaters.In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. Alice’s Production Possibilities Frontier Frontier Betty’s Production Possibilities -Refer to Figure 3-10.If point A represents Alice's production and point B represents Betty's production,

Figure 3-3 Arturo’s Production Possibilities FrontierFrontier Dina’s Production Possibilities -Refer to Figure 3-3.At which of the following prices would both Arturo and Dina gain from trade with each other?