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Exam 3: Interdependence and the Gains From Trade

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Question 51

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Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. The opportunity cost of 1 poem for Jordan is

A) 1/2 novel.
B) 1/3 novel.
C) 3 novels.
D) 4 novels.

E) A) and B)
F) B) and C)

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Question 52

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Table 3-12 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 3-12. Which of the following points would not be on Jim's production possibilities frontier, based on a 40-hour week?

A) (0 computers set up, 60 computers tested)
B) (40 computers set up, 30 computers tested)
C) (60 computers set up, 12 computers tested)
D) (72 computers set up, 6 computers tested)

E) A) and D)
F) A) and B)

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Question 53

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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 Greg's opportunity cost of producing cake? Explain how you derived your answer.

Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,

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. What is Theresa's opportunity cost of producing one pound of beef?

Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year, and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year. There are 20 workers in Agland and 10 workers in Zenland. Currently the two countries do not trade. Agland produces and consumes 100 units of grain and 20 units of incense per year. Zenland produces and consumes 50 units of grain and no incense per year. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

Table 3-8 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ -Refer to Table 3-8. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring cheese along the horizontal axis, then

Table 3-31 ​ -Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of potatoes is

David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.

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

Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. ​ -Refer to Table 3-34. Indonesia's opportunity cost of producing bananas is

Table 3-4 Assume that Andrea and Paul can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-4. Which of the following combinations of wheat and beef could Andrea produce in one 8-hour day?

The gains from trade are

Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is

Table 3-35 -Refer to Table 3-35. At which of the following prices, if any, could both Denmark and Finland gain from trade?

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. If Chile and Colombia switch from each country dividing its time equally between the production of coffee and soybeans to each country spending all of its time producing the good in which it has a comparative advantage, then total production of soybeans will increase by

Table 3-11 Assume that Max and Min can switch between producing mittens and producing hats at a constant rate. ​ -Refer to Table 3-11. Assume that Max and Min each has 36 labor hours available. If each person divides his/her time equally between the production of mittens and hats, then total production is

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. Which if any good(s) does Catherine have an absolute advantage producing?

For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Figure 3-3 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-3. If the production possibilities frontier shown for Arturo is for 100 hours of production, then how long does it take Arturo to make one burrito?