Question 1

Figure 3-2
Peru's Production Possibilities Frontier 
-Refer to Figure 3-2.If the production possibilities frontier shown is for 40 hours of production,then how long does it take Peru to make one ruby?

Accepted Answer

A)   1/6 hour
B)   1/5 hour
C)   5 hours
D)   6 hoursE) C) and D)
F) B) and D)

Question 2

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.Which of the following statements is true?

Accepted Answer

A)   Both countries could gain from trade with each other.
B)   Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods.
C)   Neither country could gain from trade with each other because neither one has a comparative advantage.
D)   Oatland could gain from trade between the two countries,but Cornland definitively would lose.E) C) and D)
F) B) and D)

Question 3

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Accepted Answer

A) True 
 B)False

Question 4

Table 3-8
Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate.
 
-Refer to Table 3-8.The opportunity cost of 1 plate for Huang is

Accepted Answer

A)   1/3 parasol.
B)   1/2 parasol.
C)   3 parasols.
D)   4 parasols.E) B) and C)
F) C) and D)

Question 5

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Accepted Answer

A)   Do specialization and trade benefit more than one party to a trade?
B)   Is it absolute advantage or comparative advantage that really matters?
C)   How are the gains from trade shared among the parties to a trade?
D)   Is it possible for specialization and trade to increase total output of traded goods?E) A) and B)
F) A) and C)

Question 6

If Shawn can produce donuts at a lower opportunity cost than Sue,then

Accepted Answer

A)   Shawn has a comparative advantage in the production of donuts.
B)   Sue has a comparative advantage in the production of donuts.
C)   Shawn should not produce donuts.
D)   Shawn is capable of producing more donuts than Sue in a given amount of time.E) C) and D)
F) A) and C)

Question 7

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.E) A) and B)
F) None of the above

Question 8

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 9

Table 3-3
Assume that Indonesia and India can switch between producing rice and bananas at a constant rate.
 
-Refer to Table 3-3.India's opportunity cost of producing rice is

Accepted Answer

A)   1/2 units of bananas.This is higher than Indonesia's opportunity cost of producing rice.
B)   1/2 units of bananas.This is lower than Indonesia's opportunity cost of producing rice.
C)   2 units of bananas.This is higher than Indonesia's opportunity cost of producing rice.
D)   2 units of bananas.This is lower than Indonesia's opportunity cost of producing rice.E) All of the above
F) A) and B)

Question 10

An economy can produce at any point on or inside its production possibilities frontier,but it cannot produce at points outside its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   Marquis is very good at knitting sweaters and at cooking tasty food,but Serena's skills in both of these activities are very poor.
B)   Marquis and Serena both are very good at cooking tasty food,but neither has the necessary skills to knit a sweater.
C)   Marquis's cooking and knitting skills are very poor,and Serena's cooking and knitting skills are also very poor.
D)   Marquis's skills are such that he can produce only sweaters,and Serena's skills are such that she can produce only tasty food.E) None of the above
F) B) and D)

Question 12

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.Without trade,the farmer produced and consumed 2 pounds of meat and 4 pounds of potatoes and the rancher produced and consumed 4 pounds of meat and 2 pounds of potatoes.Then,each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 3 pounds of meat for 6 pounds of potatoes.As a result,the farmer gained

Accepted Answer

A)   1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes.
B)   1 pound of meat and 2 pounds of potatoes and the rancher gained 1 pound of meat and 4 pounds of potatoes.
C)   3 pounds of meat and 6 pounds of potatoes and the rancher gained 5 pounds of meat and 6 pounds of potatoes.
D)   4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes.E) All of the above
F) B) and C)

Question 13

Figure 3-7
Bintu’s Production Possibilities Frontier	
 Juba’s Production Possibilities Frontier
-Refer to Figure 3-7.If Bintu and Juba each divides her time equally between making bowls and making cups,then total production is

Accepted Answer

A)   2 bowls and 6 cups.
B)   3 bowls and 7 cups.
C)   4 bowls and 8 cups.
D)   6 bowls and 14 cups.E) B) and C)
F) C) and D)

Question 14

Figure 3-8
Chile’s Production Possibilities Frontier 
Colombia’s Production Possibilities Frontier

-Refer to Figure 3-8.Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Accepted Answer

A)   12 pounds.
B)   27 pounds.
C)   30 pounds.
D)   48 pounds.E) A) and B)
F) A) and C)

Question 15

Figure 3-7
Bintu’s Production Possibilities Frontier
 
Juba’s Production Possibilities Frontier

-Refer to Figure 3-7.Suppose Juba is willing to trade one bowl to Bintu for every two cups that Bintu makes and sends to Juba.Which of the following combinations of bowls and cups could Bintu then consume,assuming Bintu specializes in making cups and Juba specializes in making bowls?

Accepted Answer

A)   1 bowl and 7 cups
B)   2 bowls and 4 cups
C)   3 bowls and 3 cups
D)   4 bowls and 1 cupE) All of the above
F) None of the above

Question 16

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-3.Assume that Zimbabwe and Portugal each has 60 machine minutes available.Originally,each country divided its time equally between the production of toothbrushes and hairbrushes.Now,each country spends all its time producing the good in which it has a comparative advantage.As a result,the total output increased by

Accepted Answer

A)   4 toothbrushes and 2 hairbrushes.
B)   10 toothbrushes and 5 hairbrushes.
C)   16 toothbrushes and 8 hairbrushes.
D)   20 toothbrushes and 10 hairbrushes.E) A) and D)
F) All of the above

Question 17

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.What is Andia's opportunity cost of producing one bushel of wheat?

Accepted Answer

A)   3/5 pound of beef
B)   6/5 pounds of beef
C)   4/3 pounds of beef
D)   5/3 pounds of beefE) A) and B)
F) B) and D)

Question 18

Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
 
-Refer to Table 3-6.We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel.If we were to do this,measuring toasters along the horizontal axis,then

Accepted Answer

A)   the slope of Maya's production possibilities frontier would be -1.6 and the slope of Miguel's production possibilities frontier would be -2.
B)   the slope of Maya's production possibilities frontier would be -0.625 and the slope of Miguel's production possibilities frontier would be -0.5.
C)   the slope of Maya's production possibilities frontier would be 0.625 and the slope of Miguel's production possibilities frontier would be 0.5.
D)   the slope of Maya's production possibilities frontier would be 1.6 and the slope of Miguel's production possibilities frontier would be 2.E) A) and D)
F) A) and C)

Question 19

Figure 3-7
Bintu’s Production Possibilities Frontier
 
Juba’s Production Possibilities Frontier

-Refer to Figure 3-7.The opportunity cost of 1 bowl for Bintu is

Accepted Answer

A)   1/4 cup.
B)   1/2 cup.
C)   2 cups.
D)   4 cups.E) B) and C)
F) A) and D)

Question 20

For both parties to gain from trade,the price at which they trade must lie exactly in the middle of the two opportunity costs.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Correct Answer
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For both parties to gain from trade,the price at which they trade must lie exactly in the middle of the two opportunity costs.

Correct Answer
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Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for 40 hours of production,then how long does it take Peru to make one ruby?

Correct Answer
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Table 3-8 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-8.The opportunity cost of 1 plate for Huang is

Correct Answer
verified

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

Correct Answer
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Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.If Bintu and Juba each divides her time equally between making bowls and making cups,then total production is

Correct Answer
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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.What is Andia's opportunity cost of producing one bushel of wheat?

Correct Answer
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Consider two individuals - Marquis and Serena - each of whom would like to wear sweaters and eat tasty food.The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Correct Answer
verified

If Shawn can produce donuts at a lower opportunity cost than Sue,then

Correct Answer
verified

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Correct Answer
verified

Table 3-3 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-3.India's opportunity cost of producing rice is

Correct Answer
verified

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.Which of the following statements is true?

Correct Answer
verified

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Correct Answer
verified

Figure 3-8 Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier -Refer to Figure 3-8.Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Correct Answer
verified

Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.The opportunity cost of 1 bowl for Bintu is

Correct Answer
verified

An economy can produce at any point on or inside its production possibilities frontier,but it cannot produce at points outside its production possibilities frontier.

Correct Answer
verified

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Correct AnswerverifiedShow Answer

For both parties to gain from trade,the price at which they trade must lie exactly in the middle of the two opportunity costs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for 40 hours of production,then how long does it take Peru to make one ruby?

Correct AnswerverifiedShow Answer

Table 3-8 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-8.The opportunity cost of 1 plate for Huang is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.If Bintu and Juba each divides her time equally between making bowls and making cups,then total production is

Correct AnswerverifiedShow Answer

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.What is Andia's opportunity cost of producing one bushel of wheat?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If Shawn can produce donuts at a lower opportunity cost than Sue,then

Correct AnswerverifiedShow Answer

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Correct AnswerverifiedShow Answer

Table 3-3 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-3.India's opportunity cost of producing rice is

Correct AnswerverifiedShow Answer

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Correct AnswerverifiedShow Answer

Figure 3-8 Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier -Refer to Figure 3-8.Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Correct AnswerverifiedShow Answer

Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.The opportunity cost of 1 bowl for Bintu is

Correct AnswerverifiedShow Answer

An economy can produce at any point on or inside its production possibilities frontier,but it cannot produce at points outside its production possibilities frontier.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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