Question 1

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

Accepted Answer

A)  burritos and a comparative advantage in the production of tacos. 
B)  burritos and a comparative advantage in the production of burritos. 
C)  neither good and a comparative advantage in the production of tacos. 
D)  neither good and a comparative advantage in the production of burritos.

Question 2

A certain cowboy spends 10 hours per day mending fences and herding cattle.For the cowboy,a graph that shows his various possible mixes of output (fences mended per day and cattle herded per day)is called his

Accepted Answer

A)  line of tastes. 
B)  trade-off curve. 
C)  production possibilities frontier. 
D)  consumption possibilities frontier.

Question 3

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 produce in a given month?

Accepted Answer

A)  7 emeralds and 40 rubies 
B)  5 emeralds and 92 rubies 
C)  3 emeralds and 165 rubies 
D)  2 emeralds and 180 rubies

Question 4

Which of the following is not correct?

Accepted Answer

A)  Economists are generally united in their support of free trade. 
B)  The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time. 
C)  David Ricardo argued that Britain should not restrict imports of grain. 
D)  Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage.

Question 5

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.Which of the following combinations of cheese and bread could Spain produce in 40 hours?

Accepted Answer

A)  2.25 units of cheese and 4 units of bread. 
B)  5.5 units of cheese and 3 units of bread. 
C)  7 units of cheese and 1.5 units of bread. 
D)  10 units of cheese and 5 units of bread.

Question 6

Table 3-16 Summary of the Gains from Trade
 
-Refer to Table 3-16.The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade.What are Alice and Betty's gains from specialization and trade?

Accepted Answer

A)  Alice gains 7 pitchers of lemonade and 10 pizzas,while Betty gains 13 pitchers of lemonade and 10 pizzas. 
B)  Alice gains 200 pitchers of lemonade and 100 pizzas,while Betty gains 180 pitchers of lemonade and 180 pizzas. 
C)  Alice gains 207 pitchers of lemonade and 110 pizzas,while Betty gains 193 pitchers of lemonade and 190 pizzas. 
D)  Alice gains 400 pitchers of lemonade and 0 pizzas,while Betty gains 0 pitchers of lemonade and 300 pizzas.

Question 7

Tom Brady should pay someone else to mow his lawn instead of mowing it himself,unless

Accepted Answer

A)  Brady has an absolute advantage over everyone else in mowing his lawn. 
B)  Brady has a comparative advantage over everyone else in mowing his lawn. 
C)  Brady's opportunity cost of mowing his lawn is higher than it is for everyone else. 
D)  All of the above are correct.

Question 8

Table 3-12
 
-Refer to Table 3-1.Relative to the rancher,the farmer has

Accepted Answer

A)  a comparative advantage in the production of meat,because the farmer's opportunity cost of a pound of meat is lower than the rancher's opportunity cost of a pound of meat. 
B)  a comparative advantage in the production of potatoes,because the rancher requires less time than the farmer to produce a pound of potatoes. 
C)  a comparative advantage in the production of potatoes; relative to the farmer,the rancher has a comparative advantage in the production of meat. 
D)  an absolute advantage in the production of both meat and potatoes.

Question 9

Table 3-2
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
 
-Refer to Table 3-2.Aruba has an absolute advantage in the production of

Accepted Answer

A)  coolers and Iceland has an absolute advantage in the production of radios. 
B)  radios and Iceland has an absolute advantage in the production of coolers. 
C)  both goods and Iceland has an absolute advantage in the production of neither good. 
D)  neither good and Iceland has an absolute advantage in the production of both goods.

Question 10

Some countries win in international trade,while other countries lose.

Accepted Answer

A) True 
 B)False

Question 11

Figure 3-9
   
-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 12

When an economist points out that you and millions of other people are interdependent,he or she is referring to the fact that we all

Accepted Answer

A)  rely upon the government to provide us with the basic necessities of life. 
B)  rely upon one another for the goods and services we consume. 
C)  have similar tastes and abilities. 
D)  are concerned about one another's well-being.

Question 13

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.Assume that Japan and Korea each has 2400 hours available.If each country divides its time equally between the production of cars and airplanes,then total production is

Accepted Answer

A)  40 cars and 8 airplanes. 
B)  64 cars and 16 airplanes. 
C)  80 cars and 16 airplanes. 
D)  128 cars and 32 airplanes.

Question 14

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.

Accepted Answer

A)  Travis has an absolute advantage over Ricardo in trimming trees. 
B)  Travis has a comparative advantage over Ricardo in mowing lawns. 
C)  Ricardo has a comparative advantage over Travis in trimming trees. 
D)  All of the above are correct.

Question 15

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
 
-Refer to Table 3-4.Assume that the farmer and the rancher each has 24 labor hours available.If each person spends all his time producing the good in which he has a comparative advantage,then total production is

Accepted Answer

A)  3 pounds of meat and 4 pounds of potatoes. 
B)  8 pounds of meat and 12 pounds of potatoes. 
C)  11 pounds of meat and 16 pounds of potatoes. 
D)  15 pounds of meat and 12 pounds of potatoes.

Question 16

If a country has the comparative advantage in producing a product,then that country must also have the absolute advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 17

Both Bill and Mary produce t-shirts and hats.If Bill's opportunity cost of 1 t-shirt is 4 hats and Mary's opportunity cost of 1 t-shirt is 3 hats,then

Accepted Answer

A)  Bill has a comparative advantage in the production of t-shirts. 
B)  Mary has a comparative advantage in the production of t-shirts. 
C)  Mary has a comparative advantage in the production of hats. 
D)  Bill has a comparative advantage in the production of both t-shirts and hats.

Question 18

Consider two individuals - Howard and Mai - each of whom would like to wear sweaters and eat tasty food.The gains from trade between Howard and Mai are least obvious in which of the following cases?

Accepted Answer

A)  Howard is very good at knitting sweaters and at cooking tasty food,but Mai's skills in both of these activities are very poor. 
B)  Howard is very good at knitting sweaters and at cooking tasty food; Mai is very good at knitting sweaters,but she knows nothing about cooking tasty food. 
C)  Howard's skills in knitting sweaters are fairly good,but his skills in cooking tasty food are fairly bad; Mai's skills in knitting sweaters are fairly bad,but her skills in cooking tasty food are fairly good. 
D)  Howard's skills are such that he can produce only sweaters,and Mai's skills are such that she can produce only tasty food.

Question 19

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn,then

Accepted Answer

A)  Iowa has a comparative advantage in the production of corn. 
B)  Iowa has an absolute advantage in the production of corn. 
C)  Iowa should import corn from Oklahoma. 
D)  Oklahoma should produce just enough corn to satisfy its own residents' demands.

Question 20

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.If the production possibilities frontier shown is for 240 hours of production,then which of the following combinations of ham and cheese could Bonovia produce in 240 hours?

Accepted Answer

A)  225 pounds of ham and 140 pounds of cheese 
B)  280 pounds of ham and 100 pounds of cheese 
C)  355 pounds of ham and 80 pounds of cheese 
D)  330 pounds of ham and 60 pounds of cheese

Exam 3: Interdependence and the Gains From Trade

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

A certain cowboy spends 10 hours per day mending fences and herding cattle.For the cowboy,a graph that shows his various possible mixes of output (fences mended per day and cattle herded per day) is called his

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 produce in a given month?

Which of the following is not correct?

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.Which of the following combinations of cheese and bread could Spain produce in 40 hours?

Table 3-16 Summary of the Gains from Trade -Refer to Table 3-16.The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade.What are Alice and Betty's gains from specialization and trade?