Question 1

Table 3-41
 
-Refer to Table 3-41. If the two countries specialize and trade with each other, which country will import compasses?

Accepted Answer

The answer of Table 3-41
 
-Refer to Table 3-41. If...

Question 2

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

Accepted Answer

A)  3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans. 
B)  3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans. 
C)  4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans. 
D)  4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans.

Question 3

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli. In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
-Refer to Scenario 3-2. Which country, if either, has an absolute advantage producing rice? Defend your answer.

Accepted Answer

The answer of Scenario 3-2
In country A a worker who...

Question 4

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. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by

Accepted Answer

A)  15. 
B)  20. 
C)  25. 
D)  40.

Question 5

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 6

Table 3-33
Chris and Tony's Production Opportunities
 
-Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is

Accepted Answer

A)  2 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 3 jars of sauce. 
B)  3 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 2 jars of sauce. 
C)  20 jars of sauce and Tony's opportunity cost of 1 lc. of tomatoes is 30 jars of sauce. 
D)  30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.

Question 7

A country that currently does not trade with other countries could benefit by

Accepted Answer

A)  restricting imports and promoting exports. 
B)  promoting imports and restricting exports. 
C)  restricting both imports and exports. 
D)  not restricting trade.

Question 8

Figure 3-4
Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier
 
-Refer to Figure 3-4. If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket?

Accepted Answer

A)  1/4 month 
B)  1/2 month 
C)  2 months 
D)  4 months

Question 9

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

Accepted Answer

A)  15 blankets and 35 meals. 
B)  25 blankets and 40 meals. 
C)  35 blankets and 45 meals. 
D)  50 blankets and 80 meals.

Question 10

Table 3-3
Production Opportunities
 
-Refer to Table 3-3. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

Accepted Answer

A)  8 units of cheese and 10 units of wine 
B)  24 units of cheese and 15 units of wine 
C)  40 units of cheese and 20 units of wine 
D)  48 units of cheese and 30 units of wine

Question 11

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.

Accepted Answer

The answer of Scenario 3-1
The production possibilities frontiers below show...

Question 12

Table 3-4
Assume that Andrea and Paul can switch between producing wheat and producing beef at a constant rate.
 
-Refer to Table 3-4. Which of the following combinations of wheat and beef could Andrea produce in one 8-hour day?

Accepted Answer

A)  16 bushels of wheat and 32 pounds of beef 
B)  9 bushels of wheat and 25 pounds of beef 
C)  7 bushels of wheat and 15 pounds of beef 
D)  10 bushels of wheat and 13 pounds of beef

Question 13

Table 3-5
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
 
-Refer to Table 3-5. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

Accepted Answer

A)   
B)   
C)   
D)

Question 14

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.

Accepted Answer

The answer of Scenario 3-1
The production possibilities frontiers below show...

Question 15

Specialization and trade are closely linked to

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  gains to some traders that exactly offset losses to other traders. 
D)  shrinkage of the economic pie.

Question 16

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's opportunity cost of one car is

Accepted Answer

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

Question 17

Figure 3-20
Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier 
-Refer to Figure 3-20. Canada's opportunity cost of one unit of Good X is

Accepted Answer

A)  1/2 unit of Good Y and Mexico's opportunity cost of one unit of Good X is 1/2 unit of Good Y. 
B)  1/2 unit of Good Y and Mexico's opportunity cost of one unit of Good X is 2 units of Good Y. 
C)  2 units of Good Y and Mexico's opportunity cost of one unit of Good X is 1/2 unit of Good Y. 
D)  2 units of Good Y and Mexico's opportunity cost of one unit of Good X is 2 units of Good Y.

Question 18

Which of the following is not an example of the principle that trade can make everyone better off?

Accepted Answer

A)  Americans buy tube socks from China. 
B)  Residents of Maine drink orange juice from Floridb. 
C)  A homeowner hires the kid next door to mow the lawn. 
D)  All of the above are examples of the principle that trade can make everyone better off.

Question 19

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 20

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. England should specialize in the production of

Accepted Answer

A)  cheese and Spain should specialize in the production of bread. 
B)  bread and Spain should specialize in the production of cheese. 
C)  both goods and Spain should specialize in the production of neither good. 
D)  neither good and Spain should specialize in the production of both goods.

Exam 3: Interdependence and the Gains From Trade

Table 3-41 -Refer to Table 3-41. If the two countries specialize and trade with each other, which country will import compasses?

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

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.

Table 3-33 Chris and Tony's Production Opportunities -Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is

A country that currently does not trade with other countries could benefit by

Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket?

Table 3-3 Production Opportunities -Refer to Table 3-3. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

Table 3-4 Assume that Andrea and Paul can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-4. Which of the following combinations of wheat and beef could Andrea produce in one 8-hour day?

Table 3-5 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-5. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

Specialization and trade are closely linked to

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's opportunity cost of one car is

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. Canada's opportunity cost of one unit of Good X is

Which of the following is not an example of the principle that trade can make everyone better off?

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

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. England should specialize in the production of