Question 1

Use the following Table to answer the question : Table 3-36
 
-Refer to Table 3-36. What is Barbuda's opportunity cost of one umbrella?

Accepted Answer

A)  3/5 towels 
B)  2/3 towels 
C)  3/2 towels 
D)  5/3 towels

Question 2

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 Maxine and Daisy each divides her time equally between making pies and making tarts, then total production is

Accepted Answer

A)  6 pies and 10 tarts. 
B)  7.5 pies and 3 tarts. 
C)  7.5 pies and 10 tarts. 
D)  13.5 pies and 13 tarts.

Question 3

Use the following Figure to answer the question : Figure 3-20
Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier 
-Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good X will increase by

Accepted Answer

A)  3 units. 
B)  6 units. 
C)  9 units. 
D)  12 units.

Question 4

Use the following Table to answer the question : Table 3-36
 
-Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

Accepted Answer

A)  3/5 umbrellas 
B)  2/3 umbrellas 
C)  3/2 umbrellas 
D)  5/3 umbrellas

Question 5

Use the following scenario to answer the question : 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 ice cream? Explain how you derived your answer.

Accepted Answer

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

Question 6

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 7

Economists use the term to refer to the ability to produce a good using fewer inputs than another producer.

Accepted Answer

The answer of Economists use the term to refer to...

Question 8

Use the following Table to answer the question : Table 3-36
 
-Refer to Table 3-36. Antigua has an absolute advantage in the production of

Accepted Answer

A)  towels and Barbuda has an absolute advantage in the production of umbrellas. 
B)  umbrellas and Barbuda has an absolute advantage in the production of towels. 
C)  both goods and Barbuda has an absolute advantage in the production of neither good. 
D)  neither good and Barbuda has an absolute advantage in the production of both goods.

Question 9

Use the following Table to answer the question : Table 3-41 
-Refer to Table 3-41. Which country has a comparative advantage in producing compasses?

Accepted Answer

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

Question 10

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 11

Use the following Table to answer the question : Table 3-28
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 3-28. Barb has an absolute advantage in

Accepted Answer

A)  both setting up and testing computers and a comparative advantage in setting up computers. 
B)  both setting up and testing computers and a comparative advantage in testing computers. 
C)  neither setting up nor testing computers and a comparative advantage in setting up computers. 
D)  neither setting up nor testing computers and a comparative advantage in testing computers.

Question 12

Use the following Table to answer the question : Table 3-41 
-Refer to Table 3-41. If the two countries decide to trade with each other, which country should specialize in producing compasses?

Accepted Answer

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

Question 13

Use the following Figure to answer the question : Figure 3-18
Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier 
-Refer to Figure 3-18. Bintu has an absolute advantage in the production of

Accepted Answer

A)  bowls and Juba has an absolute advantage in the production of cups. 
B)  cups and Juba has an absolute advantage in the production of bowls. 
C)  both goods and Juba has an absolute advantage in the production of neither good. 
D)  neither good and Juba has an absolute advantage in the production of both goods.

Question 14

Use the following Table to answer the question : Table 3-20
Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.
 
-Refer to Table 3-20. Brad has a comparative advantage in the production of

Accepted Answer

A)  wheat and Theresa has a comparative advantage in the production of beef. 
B)  beef and Theresa has a comparative advantage in the production of wheat. 
C)  both goods and Theresa has a comparative advantage in the production of neither good. 
D)  neither good and Theresa has a comparative advantage in the production of both goods.

Question 15

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 France produce in 40 hours?

Accepted Answer

A)  2 units of cheese and 20 units of wine 
B)  4 units of cheese and 15 units of wine 
C)  6 units of cheese and 5 units of wine 
D)  8 units of cheese and 20 units of wine

Question 16

Use the following Table to answer the question : 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. Without trade, Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes. As a result, Japan gained

Accepted Answer

A)  0 cars and 2 airplanes and Korea gained 1 car and 1 airplane. 
B)  2 cars and 2 airplanes and Korea gained 1 car and 1 airplane. 
C)  28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes. 
D)  52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.

Question 17

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 18

Use the following Table to answer the question : Table 3-6
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-6. Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?

Accepted Answer

A)  5 toothbrushes and 11 hairbrushes 
B)  10 toothbrushes and 9 hairbrushes 
C)  20 toothbrushes and 6 hairbrushes 
D)  30 toothbrushes and 3 hairbrushes

Question 19

Use the following Table to answer the question : Table 3-10
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-10. 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 20

Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?

Accepted Answer

The answer of Tom's opportunity cost of mowing a lawn...

Exam 3: Interdependence and the Gains From Trade

Use the following Table to answer the question : Table 3-36 -Refer to Table 3-36. What is Barbuda's opportunity cost of one umbrella?

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 Maxine and Daisy each divides her time equally between making pies and making tarts, then total production is

Use the following Table to answer the question : Table 3-36 -Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

Which of the following is not correct?

Economists use the term to refer to the ability to produce a good using fewer inputs than another producer.

Use the following Table to answer the question : Table 3-36 -Refer to Table 3-36. Antigua has an absolute advantage in the production of

Use the following Table to answer the question : Table 3-41 -Refer to Table 3-41. Which country has a comparative advantage in producing compasses?

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

Use the following Table to answer the question : Table 3-41 -Refer to Table 3-41. If the two countries decide to trade with each other, which country should specialize in producing compasses?

Use the following Figure to answer the question : Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. Bintu has an absolute advantage in the production of

Use the following Table to answer the question : Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. Brad has a comparative advantage in the production of

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 France produce in 40 hours?

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.

Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?