Question 1

By definition, imports are

Accepted Answer

A)  people who work in foreign countries.
B)  goods in which a country has an absolute advantage.
C)  limits placed on the quantity of goods leaving a country.
D)  goods produced abroad and sold domestically.E) A) and B)
F) A) and C)

Question 2

Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
​  ​
-Refer to Table 3-24. England has a comparative advantage in the production of

Accepted Answer

A)  cheese and Spain has a comparative advantage in the production of bread.
B)  bread and Spain has a comparative advantage in the production of cheese.
C)  both goods and Spain has a comparative advantage in the production of neither good.
D)  neither good and Spain has a comparative advantage in the production of both goods.E) B) and C)
F) C) and D)

Question 3

Figure 3-21
Uzbekistan's Production Possibilities Frontier
Azerbaijan's Production Possibilities Frontier  
-Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision?

Accepted Answer

A)  1/2 nail
B)  2 nails
C)  5 nails
D)  20 nailsE) B) and D)
F) All of the above

Question 4

Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

Table 3-19 Summary of the Gains from Trade
​ 
-Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?

Accepted Answer

A)  Alice gains 7 pitchers of lemonade and 10 pizzas, while Betty gains 13 pitchers of lemonade and 10 pizzas.
B)  Alice gains 200 pitchers of lemonade and 100 pizzas, while Betty gains 180 pitchers of lemonade and 180 pizzas.
C)  Alice gains 207 pitchers of lemonade and 110 pizzas, while Betty gains 193 pitchers of lemonade and 190 pizzas.
D)  Alice gains 400 pitchers of lemonade and 0 pizzas, while Betty gains 0 pitchers of lemonade and 300 pizzas.E) A) and B)
F) A) and C)

Question 6

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.E) All of the above
F) A) and C)

Question 7

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 rice? Defend your answer using the numbers given.

Accepted Answer

Country A has a comparative ad...

Question 8

Figure 3-22
Alice and Betty's Production Possibilities in one 8-hour day.
Alice's Production Possibilities Frontier
Betty's Production Possibilities Frontier  
-Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pizza?

Accepted Answer

A)  Alice's opportunity cost of 1 pizza is 1/2 of a pitcher of lemonade and Betty's opportunity cost of 1 pizza is 2/3 of a pitcher of lemonade.
B)  Alice's opportunity cost of 1 pizza is 1 pitcher of lemonade and Betty's opportunity cost of 1 pizza is 3 pitchers of lemonade.
C)  Alice's opportunity cost of 1 pizza is 2 pitchers of lemonade and Betty's opportunity cost of 1 pizza is 1.5 pitchers of lemonade.
D)  Alice's opportunity cost of 1 pizza is 400 pitchers of lemonade and Betty's opportunity cost of 1 pizza is 450 pitchers of lemonade.E) B) and C)
F) A) and C)

Question 9

Figure 3-2
Brazil's Production Possibilities Frontier 
-Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Accepted Answer

A)  for Brazil, it is more costly to produce peanuts than it is to produce cashews.
B)  Brazil will produce more peanuts and fewer cashews as time goes by.
C)  Brazil faces a tradeoff between producing peanuts and producing cashews.
D)  Brazil should specialize in producing cashews.E) A) and B)
F) B) and C)

Question 10

Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?

Accepted Answer

A)  Abby does not like flowers and Liam does not like brownies.
B)  Abby is better than Liam at baking brownies and Liam is better than Abby at growing flowers.
C)  Liam is better than Abby at baking brownies and at growing flowers.
D)  Both Abby and Liam can benefit from trade in all of the above cases.E) B) and D)
F) A) and B)

Question 11

Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
​  ​
-Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Accepted Answer

A)  1/4 unit of cheese.
B)  1/4 hour of labor.
C)  4 units of cheese.
D)  4 hours of labor.E) C) and D)
F) B) and C)

Question 12

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Accepted Answer

Absolute advantage refers to productivit...

Question 13

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier  
-Refer to Figure 3-26. If Mary and Kate trade foods with each other, who will trade away muffins in exchange for cookies?

Accepted Answer

Because Mary has a comparative...

Question 14

Figure 3-16
Hosne's Production Possibilities Frontier
Merve's Production Possibilities Frontier  
-Refer to Figure 3-16. Merve should specialize in the production of

Accepted Answer

A)  purses.
B)  wallets.
C)  both goods.
D)  neither good.E) B) and D)
F) B) and C)

Question 15

Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
​  ​
-Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is

Accepted Answer

A)  1/2 unit of bread.
B)  2 hours of labor.
C)  2 units of bread.
D)  4 hours of labor.E) A) and D)
F) B) and D)

Question 16

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.E) B) and D)
F) B) and C)

Question 17

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 an absolute advantage in the production of

Accepted Answer

A)  wheat and Theresa has an absolute advantage in the production of beef.
B)  beef and Theresa has an absolute advantage in the production of wheat.
C)  both goods and Theresa has an absolute advantage in the production of neither good.
D)  neither good and Theresa has an absolute advantage in the production of both goods.E) A) and D)
F) B) and D)

Question 18

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. Miguel has an absolute advantage in the production of

Accepted Answer

A)  both goods and a comparative advantage in the production of mixers.
B)  both goods and a comparative advantage in the production of toasters.
C)  neither good and a comparative advantage in the production of mixers.
D)  neither good and a comparative advantage in the production of toasters.E) All of the above
F) A) and D)

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.E) B) and C)
F) A) and D)

Question 20

Figure 3-16
Hosne's Production Possibilities Frontier
Merve's Production Possibilities Frontier  
-Refer to Figure 3-16. Hosne's opportunity cost of one wallet is

Accepted Answer

A)  4/5 purse and Merve's opportunity cost of one wallet is 2/3 purse.
B)  4/5 purse and Merve's opportunity cost of one wallet is 3/2 purses.
C)  5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse.
D)  5/4 purses and Merve's opportunity cost of one wallet is 3/2 purses.E) A) and B)
F) B) and D)

Exam 3: Interdependence and the Gains From Trade

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision?

Correct Answer
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Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

Correct Answer
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Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. If Mary and Kate trade foods with each other, who will trade away muffins in exchange for cookies?

Correct Answer
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Because Mary has a comparative...
View Answer

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Hosne's opportunity cost of one wallet is

Correct Answer
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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

Correct Answer
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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. Miguel has an absolute advantage in the production of

Correct Answer
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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 an absolute advantage in the production of

Correct Answer
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Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Merve should specialize in the production of

Correct Answer
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Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. England has a comparative advantage in the production of

Correct Answer
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Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Correct Answer
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Absolute advantage refers to productivit...
View Answer

Table 3-19 Summary of the Gains from Trade -Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?

Correct Answer
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Correct Answer
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Country A has a comparative ad...
View Answer

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Correct Answer
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Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?

Correct Answer
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Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Correct Answer
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By definition, imports are

Correct Answer
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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

Correct Answer
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Figure 3-22 Alice and Betty's Production Possibilities in one 8-hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pizza?

Correct Answer
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Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is

Correct Answer
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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

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision?

Correct AnswerverifiedShow Answer

Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

Correct AnswerverifiedShow Answer

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. If Mary and Kate trade foods with each other, who will trade away muffins in exchange for cookies?

Correct AnswerverifiedBecause Mary has a comparative...View AnswerShow Answer

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Hosne's opportunity cost of one wallet is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. Miguel has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

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 an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Merve should specialize in the production of

Correct AnswerverifiedShow Answer

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ ​ -Refer to Table 3-24. England has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Correct AnswerverifiedAbsolute advantage refers to productivit...View AnswerShow Answer

Table 3-19 Summary of the Gains from Trade ​ -Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCountry A has a comparative ad...View AnswerShow Answer

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ ​ -Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Correct AnswerverifiedShow Answer

Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?

Correct AnswerverifiedShow Answer

Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Correct AnswerverifiedShow Answer

By definition, imports are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 3-22 Alice and Betty's Production Possibilities in one 8-hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pizza?

Correct AnswerverifiedShow Answer

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ ​ -Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Because Mary has a comparative...
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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. Miguel has an absolute advantage in the production of

Correct Answer
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Correct Answer
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Correct Answer
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Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. England has a comparative advantage in the production of

Correct Answer
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Correct Answer
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Absolute advantage refers to productivit...
View Answer

Table 3-19 Summary of the Gains from Trade -Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?

Correct Answer
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Correct Answer
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Country A has a comparative ad...
View Answer

Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is

Correct Answer
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Table 3-24 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is

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