Question 1

Figure 3-2
Peru's Production Possibilities Frontier
 
-Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?

Accepted Answer

A)  6 emeralds and 60 rubies 
B)  4 emeralds and 120 rubies 
C)  3 emeralds and 160 rubies 
D)  1 emeralds and 210 rubies

Question 2

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-3.Zimbabwe's opportunity cost of one hairbrush is

Accepted Answer

A)  3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush. 
B)  3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes. 
C)  10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush. 
D)  10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.

Question 3

Table 3-9
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies.
 
-Refer to Table 3-9.Which of the following points would not be on Jim's production possibilities frontier,based on a 40-hour week?

Accepted Answer

A)  (0 computers set up, 60 computers tested) 
B)  (40 computers set up, 30 computers tested) 
C)  (60 computers set up, 12 computers tested) 
D)  (72 computers set up, 6 computers tested)

Question 4

Figure 3-4
 
-Refer to Figure 3-4.Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry.Which of the following combinations of novels and poems could Jordan then consume,assuming Jordan specializes in novel production and Perry specializes in poem production?

Accepted Answer

A)  1 novel and 14 poems 
B)  2 novels and 8 poems 
C)  3 novels and 6 poems 
D)  4 novels and 2 poems

Question 5

The principle of comparative advantage states that,regardless of the price at which trade takes place,everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 6

Figure 3-3
 
-Refer to Figure 3-3.Arturo's opportunity cost of one burrito is

Accepted Answer

A)  3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco. 
B)  3/4 taco and Dina's opportunity cost of one burrito is 2 tacos. 
C)  4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco. 
D)  4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos.

Question 7

International trade can make some individuals within a country worse off,even as it makes the country as a whole better off.

Accepted Answer

A) True 
 B)False

Question 8

Figure 3-9
 
-Refer to Figure 3-9.If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails,then

Accepted Answer

A)  neither Uzbekistan nor Azerbaijan will gain from this trade. 
B)  Uzbekistan will gain from this trade, but Azerbaijan will not. 
C)  Azerbaijan will gain from this trade, but Uzbekistan will not. 
D)  both Uzbekistan and Azerbaijan will gain from this trade.

Question 9

When two countries trade with one another,it is most likely because

Accepted Answer

A)  the wealthy people in each of the two countries are able to benefit, through trade, by taking advantage of other people who are poor. 
B)  some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade. 
C)  the opportunity costs of producing various goods are identical for the two countries. 
D)  the two countries wish to take advantage of the principle of comparative advantage.

Question 10

To produce 100 bushels of wheat,Farmer A requires fewer inputs than does Farmer B.We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Accepted Answer

A) True 
 B)False

Question 11

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.Originally,each person divided his/her time equally between the production of parasols and plates.Now,each person spends all their time producing the good in which they have a comparative advantage.As a result,the total output of plates increased by

Accepted Answer

A)  0. 
B)  1.5. 
C)  3. 
D)  9.

Question 12

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.In the nation of Cropitia,the opportunity cost of a pound of cheese is 1.5 pounds of ham.Based on this information,if Bonovia and Cropitia want to trade,Bonovia should specialize in the production of

Accepted Answer

A)  ham and import cheese. 
B)  cheese and import ham. 
C)  both goods and import neither good. 
D)  neither good and import both goods..

Question 13

Figure 3-6
 
-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 14

Table 3-11
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
 
-Refer to Table 3-11.Falda has a comparative advantage in the production of

Accepted Answer

A)  wheat. 
B)  cloth. 
C)  both goods. 
D)  neither good.

Question 15

Figure 3-9
 
-Refer to Figure 3-9.Azerbaijan's opportunity cost of one nail is

Accepted Answer

A)  1/4 bolt and Uzbekistan's opportunity cost of one nail is 1/2 bolt. 
B)  1/4 bolt and Uzbekistan's opportunity cost of one nail is 2 bolts. 
C)  4 bolts and Uzbekistan's opportunity cost of one nail is 1/2 bolt. 
D)  4 bolts and Uzbekistan's opportunity cost of one nail is 2 bolts.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

A production possibilities frontier is a straight line when

Accepted Answer

A)  the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. 
B)  an economy is interdependent and engaged in trade instead of self-sufficient. 
C)  the rate of tradeoff between the two goods being produced is constant. 
D)  the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.

Question 18

Table 3-10
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies.
 
-Refer to Table 3-10.Juanita has an absolute advantage in

Accepted Answer

A)  programming cellular phones and a comparative advantage in programming cellular phones. 
B)  programming cellular phones and a comparative advantage in testing cellular phones. 
C)  testing cellular phones and a comparative advantage in programming cellular phones. 
D)  testing cellular phones and a comparative advantage in testing cellular phones.

Question 19

Economists generally support

Accepted Answer

A)  trade restrictions. 
B)  government management of trade. 
C)  export subsidies. 
D)  free international trade.

Question 20

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-7.Japan's opportunity cost of one airplane is

Accepted Answer

A)  1/5 car and Korea's opportunity cost of one airplane is 1/3 car. 
B)  1/5 car and Korea's opportunity cost of one airplane is 3 cars. 
C)  5 cars and Korea's opportunity cost of one airplane is 1/3 car. 
D)  5 cars and Korea's opportunity cost of one airplane is 3 cars.

Exam 3: Interdependence and the Gains from Trade.

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3.Zimbabwe's opportunity cost of one hairbrush is

The principle of comparative advantage states that,regardless of the price at which trade takes place,everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Figure 3-3 -Refer to Figure 3-3.Arturo's opportunity cost of one burrito is

International trade can make some individuals within a country worse off,even as it makes the country as a whole better off.

Figure 3-9 -Refer to Figure 3-9.If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails,then

When two countries trade with one another,it is most likely because

To produce 100 bushels of wheat,Farmer A requires fewer inputs than does Farmer B.We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

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

Table 3-11 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-11.Falda has a comparative advantage in the production of

Figure 3-9 -Refer to Figure 3-9.Azerbaijan's opportunity cost of one nail is

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.

A production possibilities frontier is a straight line when

Table 3-10 Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. -Refer to Table 3-10.Juanita has an absolute advantage in

Economists generally support

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan's opportunity cost of one airplane is