Question 1

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 2

Olivia bakes cakes and Andrew grows corn. Olivia and Andrew both like to eat cake and eat corn. In which of the following cases is it impossible for both Olivia and Andrew to benefit from trade?

Accepted Answer

A)  Olivia cannot grow corn and Andrew cannot bake cakes. 
B)  Olivia is better than Andrew at baking cakes and Andrew is better than Olivia at growing corn. 
C)  Olivia is better than Andrew at baking cakes and at growing corn. 
D)  Both Olivia and Andrew can benefit from trade in all of the above cases.

Question 3

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 lb. 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 4

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 5

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 6

Table 3-22
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of

Accepted Answer

A)  toothbrushes and a comparative advantage in the production of toothbrushes. 
B)  toothbrushes and a comparative advantage in the production of hairbrushes. 
C)  hairbrushes and a comparative advantage in the production of toothbrushes. 
D)  hairbrushes and a comparative advantage in the production of hairbrushes.

Question 7

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier 
-Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

Accepted Answer

The answer of Figure 3-26
Mary's Production Possibilities Frontier Kate's Production...

Question 10

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 Iceland's production possibilities frontier when 100 labor hours are available?

Accepted Answer

A) 
 
B) 
 
C) 
 
D)

Question 11

An assumption of the production possibilities frontier model is that technology is fixed.

Accepted Answer

A) True 
 B)False

Question 12

Figure 3-4
Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier
 
-Refer to Figure 3-4. If Bryce must work 4 months to produce each sweater, then his production possibilities frontier is based on how many months of work?

Accepted Answer

A)  4 months 
B)  8 months 
C)  12 months 
D)  16 months

Question 13

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. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is

Accepted Answer

A)  24 toothbrushes and 12 hairbrushes. 
B)  48 toothbrushes and 24 hairbrushes. 
C)  96 toothbrushes and 48 hairbrushes. 
D)  720 toothbrushes and 1440 hairbrushes.

Question 14

Figure 3-24
The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time.
Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier
  
-Refer to Figure 3-24. Betty has

Accepted Answer

A)  an absolute and comparative advantage producing good x. 
B)  an absolute but not a comparative advantage producing good x. 
C)  a comparative but not an absolute advantage producing good x. 
D)  neither a comparative nor an absolute advantage producing good x.

Question 15

A: Comparative Advantage: The Driving Force of Specialization
-Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

Accepted Answer

A)  200 airplanes, 5,000 cars) and 150 airplanes, 4,000 cars) 
B)  200 airplanes, 12,500 cars) and 150 airplanes, 15,000 cars) 
C)  300 airplanes, 15,000 cars) and 200 airplanes, 25,000 cars) 
D)  300 airplanes, 25,000 cars) and 200 airplanes, 40,000 cars)

Question 16

Table 3-30
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
 
-Refer to Table 3-30. Varick has an absolute advantage in the production of

Accepted Answer

A)  wheat. 
B)  cloth. 
C)  both goods. 
D)  neither good.

Question 17

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Table 3-16
The following table contains some production possibilities for an economy for a given month.
 
-Refer to Table 3-16. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  200. 
B)  300. 
C)  400. 
D)  500.

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 how long does it take Bonovia to make one pound of cheese?

Accepted Answer

A)  3/5 hour 
B)  3/4 hour 
C)  4/3 hours 
D)  5/3 hours

Exam 3: Interdependence and the Gains From Trade

Olivia bakes cakes and Andrew grows corn. Olivia and Andrew both like to eat cake and eat corn. In which of the following cases is it impossible for both Olivia and Andrew to benefit from trade?

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

Table 3-36 -Refer to Table 3-36. Antigua has an absolute advantage in the production of

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves.

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.

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

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 Iceland's production possibilities frontier when 100 labor hours are available?

An assumption of the production possibilities frontier model is that technology is fixed.

Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If Bryce must work 4 months to produce each sweater, then his production possibilities frontier is based on how many months of work?

Figure 3-24 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-24. Betty has

A: Comparative Advantage: The Driving Force of Specialization -Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

Table 3-30 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-30. Varick has an absolute advantage in the production of

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

By definition, exports are

Table 3-16 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-16. If the production possibilities frontier is bowed outward, then "?" could be