Question 1

Opportunity cost measures the trade-off between two goods that each producer faces.

Accepted Answer

A) True 
 B)False

Question 2

Figure 3-8
   
-Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

Accepted Answer

A)  12 pounds of coffee and 12 pounds of soybeans. 
B)  14 pounds of coffee and 9 pounds of soybeans. 
C)  16 pounds of coffee and 6 pounds of soybeans. 
D)  28 pounds of coffee and 18 pounds of soybeans.

Question 3

Table 3-18
Chris and Tony's Production Opportunities
 
-Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. If the US exports semiconductors to Mexico and imports auto parts from Mexico,

Accepted Answer

A)  both countries, as a whole, will be better off. 
B)  all individuals in both countries will be better off. 
C)  both countries, as a whole, will be worse off. 
D)  all individuals in both countries will be worse off.

Question 4

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.
   
-Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pizza?

Accepted Answer

A)  Alice's opportunity cost of 1 pizza is 1/2 of a pitcher of lemonade and Betty's opportunity cost of 1 pizza is 2/3 of a pitcher of lemonade. 
B)  Alice's opportunity cost of 1 pizza is 1 pitcher of lemonade and Betty's opportunity cost of 1 pizza is 3 pitchers of lemonade. 
C)  Alice's opportunity cost of 1 pizza is 2 pitchers of lemonade and Betty's opportunity cost of 1 pizza is 1.5 pitchers of lemonade. 
D)  Alice's opportunity cost of 1 pizza is 400 pitchers of lemonade and Betty's opportunity cost of 1 pizza is 450 pitchers of lemonade.

Question 5

Figure 3-6
   
-Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

Accepted Answer

A)  6 hours 
B)  7.5 hours 
C)  37.5 hours 
D)  50 hours

Question 6

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 cheese for England is

Accepted Answer

A)  1/4 unit of bread. 
B)  1 hour of labor. 
C)  4 units of bread. 
D)  4 hours of labor.

Question 7

People who provide you with goods and services

Accepted Answer

A)  are acting out of generosity. 
B)  do so because they get something in return. 
C)  have chosen not to become interdependent. 
D)  are required to do so by the government.

Question 8

Trade allows a country to consume outside its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 9

An economy's production possibilities frontier is also its consumption possibilities frontier

Accepted Answer

A)  under all circumstances. 
B)  under no circumstances. 
C)  when the economy is self-sufficient. 
D)  when the rate of tradeoff between the two goods being produced is constant.

Question 10

Figure 3-9
   
-Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is

Accepted Answer

A)  15 bolts and 40 nails. 
B)  25 bolts and 70 nails. 
C)  30 bolts and 80 nails. 
D)  50 bolts and 140 nails.

Question 11

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
 
-Refer to Table 3-1. Assume that Andia and Zardia each has 60 minutes 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 bushels of wheat and 6 pounds of beef. 
B)  3.5 bushels of wheat and 5.5 pounds of beef. 
C)  4 bushels of wheat and 5 pounds of beef. 
D)  7 bushels of wheat and 11 pounds of beef.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

Accepted Answer

A)  100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. 
B)  300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. 
C)  200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. 
D)  300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

Question 14

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 15

Table 3-18
Chris and Tony's Production Opportunities
 
-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 16

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. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by

Accepted Answer

A)  0.75 pound. 
B)  0.80 pound. 
C)  1.00 pounds. 
D)  1.25 pounds.

Question 17

Table 3-18
Chris and Tony's Production Opportunities
 
-By definition, imports are

Accepted Answer

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

Question 18

For international trade to benefit a country, it must benefit all citizens of that country.

Accepted Answer

A) True 
 B)False

Question 19

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
 
-Refer to Table 3-1. Andia should specialize in the production of

Accepted Answer

A)  wheat and Zardia should specialize in the production of beef. 
B)  beef and Zardia should specialize in the production of wheat. 
C)  both goods and Zardia should specialize in the production of neither good. 
D)  neither good and Zardia should specialize in the production of both goods.

Question 20

Figure 3-6
   
-Refer to Figure 3-6. Maxine has an absolute advantage in the production of

Accepted Answer

A)  both goods and a comparative advantage in the production of pies. 
B)  both goods and a comparative advantage in the production of tarts. 
C)  neither good and a comparative advantage in the production of pies. 
D)  neither good and a comparative advantage in the production of tarts.

Exam 3: Interdependence and the Gains From Trade

Opportunity cost measures the trade-off between two goods that each producer faces.

Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pizza?

Figure 3-6 -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

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 cheese for England is

People who provide you with goods and services

Trade allows a country to consume outside its production possibilities frontier.

An economy's production possibilities frontier is also its consumption possibilities frontier

Figure 3-9 -Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is

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

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

Table 3-18 Chris and Tony's Production Opportunities -By definition, exports are

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. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by

Table 3-18 Chris and Tony's Production Opportunities -By definition, imports are

For international trade to benefit a country, it must benefit all citizens of that country.

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. Andia should specialize in the production of

Figure 3-6 -Refer to Figure 3-6. Maxine has an absolute advantage in the production of