Question 1

Use the following Figure to answer the question :Figure 3-10
Alice and Betty's Production Possibilities in one 8­hour day.
Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier
 
-Refer to Figure 3-10. Both Alice and Betty

Accepted Answer

A)  face a constant trade-off between producing pitchers of lemonade and pizzas. 
B)  can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production. 
C)  would benefit from specializing in lemonade production. 
D)  would benefit from specializing in pizza production.

Question 2

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 3

Use the following Table to answer the question : Table 3-3
Production Opportunities
 
-Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

Accepted Answer

A)  12 units of cheese and 7 units of wine 
B)  16 units of cheese and 6 units of wine 
C)  20 units of cheese and 5 units of wine 
D)  26 units of cheese and 4 units of wine

Question 4

Use the following Table to answer the question : table 3-14 : Assume that Nick and Faldo can switch between producing wheat and producing cloth at a constant rate.
Refer to Table 3-14. Assume that Nick and Faldo each has 2 hours available. If each person divides his time equally between the production of wheat and cloth, then total production is

Accepted Answer

A)  8 bushels of wheat and 15 yards of cloth. 
B)  14 bushels of wheat and 27 yards of cloth. 
C)  16 bushels of wheat and 30 yards of cloth. 
D)  28 bushels of wheat and 34 yards of cloth.

Question 5

When a country has a comparative advantage in producing a certain good,

Accepted Answer

A)  the country should import that good. 
B)  the country should produce just enough of that good for its own consumption. 
C)  the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good. 
D)  None of the above is correct.

Question 6

Use the following Figure to answer the question :Figure 3-6
Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier
 
-Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Accepted Answer

A)  2 pies and 25 tarts 
B)  10 pies and 22 tarts 
C)  12 pies and 15 tarts 
D)  15 pies and 16 tarts

Question 7

Use the following Figure to answer the question : Figure 3-15
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier
 
-Refer to Figure 3-15. Perry has a comparative advantage in the production of

Accepted Answer

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

Question 8

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Accepted Answer

A) True 
 B)False

Question 9

Use the following Figure to answer the question : Figure 3-25
Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier 
-Refer to Figure 3-25. Chile should specialize in the production of

Accepted Answer

A)  coffee and import soybeans. 
B)  soybeans and import coffee. 
C)  both goods and import neither good. 
D)  neither good and import both goods.

Question 10

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 11

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Accepted Answer

A) True 
 B)False

Question 12

Use the following scenario to answer the question : 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 a comparative advantage producing broccoli? Defend your answer using the numbers given.

Accepted Answer

The answer of Use the following scenario to answer the...

Question 13

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

A) True 
 B)False

Question 14

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

Accepted Answer

A) True 
 B)False

Question 15

Use the following Figure to answer the question : Figure 3-17
Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier
 
-Refer to Figure 3-17. Daisy 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.

Question 16

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 17

Use the following Table to answer the question : Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
 
-Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is

Accepted Answer

A)  0.625 mixers. 
B)  1.6 hours of labor. 
C)  1.6 mixers. 
D)  8 hours of labor.

Question 18

Use the following Table to answer the question : Table 3-34
Assume that Indonesia and India can switch between producing rice and bananas at a constant rate.
 
-Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?

Accepted Answer

A)  1/5 units of bananas per unit of rice. 
B)  1/3 units of bananas per unit of rice. 
C)  3/5 units of bananas per unit of rice. 
D)  None of the above.

Question 19

Use the following Figure to answer the question :Figure 3-8
Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier 
-Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of pounds of coffee and pounds of soybeans could Chile and Colombia together not make in a given day?

Accepted Answer

A)  4 pounds of coffee and 17 pounds of soybeans 
B)  8 pounds of coffee and 14 pounds of soybeans 
C)  16 pounds of coffee and 9 pounds of soybeans 
D)  24 pounds of coffee and 3 pounds of soybeans

Question 20

Use the following Figure to answer the question : Figure 3-19
Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier 
-Refer to Figure 3-19. 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.

Exam 3: Interdependence and the Gains From Trade

Use the following Figure to answer the question :Figure 3-10 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

Specialization and trade are closely linked to

Use the following Table to answer the question : Table 3-3 Production Opportunities -Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

When a country has a comparative advantage in producing a certain good,

Use the following Figure to answer the question : Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has a comparative advantage in the production of

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Use the following Figure to answer the question : Figure 3-25 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-25. Chile should specialize in the production of

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.

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

Use the following Figure to answer the question : Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. Daisy has an absolute advantage in the production of

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

Use the following Table to answer the question : Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is

Use the following Table to answer the question : Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?

Use the following Figure to answer the question : Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile has an absolute advantage in the production of

Exam 3: Interdependence and the Gains From Trade

Use the following Figure to answer the question :Figure 3-10 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

Specialization and trade are closely linked to

Use the following Table to answer the question : Table 3-3 Production Opportunities -Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

When a country has a comparative advantage in producing a certain good,

Use the following Figure to answer the question : Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has a comparative advantage in the production of

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers.

Use the following Figure to answer the question : Figure 3-25 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-25. Chile should specialize in the production of

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.

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

Use the following Figure to answer the question : Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17. Daisy has an absolute advantage in the production of

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

Use the following Table to answer the question : Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is

Use the following Table to answer the question : Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?

Use the following Figure to answer the question : Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile has an absolute advantage in the production of

Use the following Figure to answer the question :Figure 3-10 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty