Question 1

Adam Smith asserted that a person should never attempt to make at home

Accepted Answer

A)   what it will cost him more to make than to buy.
B)   any good in which that person does not have an absolute advantage.
C)   any luxury good.
D)   any necessity.E) A) and B)
F) A) and C)

Question 2

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

Accepted Answer

A) True 
 B)False

Question 3

For a self-sufficient producer,the production possibilities frontier

Accepted Answer

A)   is the same as the consumption possibilities frontier.
B)   is greater than the consumption possibilities frontier.
C)   is less than the consumption possibilities frontier.
D)   is always a straight line.E) A) and D)
F) C) and D)

Question 4

Figure 3-6
 
-Refer to Figure 3-6.Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy.Which of the following combinations of pies and tarts could Maxine not then consume,assuming Maxine specializes in making pies and Daisy specializes in making tarts?

Accepted Answer

A)   4 pies and 6 tarts
B)   6 pies and 5 tarts
C)   8 pies and 3 tarts
D)   10 pies and 1.5 tartsE) B) and C)
F) A) and D)

Question 5

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-7.Japan's opportunity cost of one car is

Accepted Answer

A)   1/5 airplane and Korea's opportunity cost of one car is 1/3 airplane.
B)   1/5 airplane and Korea's opportunity cost of one car is 3 airplanes.
C)   5 airplanes and Korea's opportunity cost of one car is 1/3 airplane.
D)   5 airplanes and Korea's opportunity cost of one car is 3 airplanes.E) B) and D)
F) B) and C)

Question 6

Table 3-9
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 3-9.Jim 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.E) All of the above
F) A) and C)

Question 7

Table 3-2
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
 
-Refer to Table 3-2.Aruba has an absolute advantage in the production of

Accepted Answer

A)   coolers and Iceland has an absolute advantage in the production of radios.
B)   radios and Iceland has an absolute advantage in the production of coolers.
C)   both goods and Iceland has an absolute advantage in the production of neither good.
D)   neither good and Iceland has an absolute advantage in the production of both goods.E) B) and D)
F) A) and D)

Question 8

Figure 3-4
 
-Refer to Figure 3-4.If the production possibilities frontier shown for Perry is for 6 months of writing,then how long does it take Perry to write one poem?

Accepted Answer

A)   1/3 month
B)   1/2 month
C)   2 months
D)   3 monthsE) A) and B)
F) A) and D)

Question 9

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.Which of the following combinations of mixers and toasters could Miguel not produce in 90 hours?

Accepted Answer

A)   0 mixers and 4 toasters.
B)   1 mixer and 3 toasters.
C)   0.75 mixers and 2.5 toasters.
D)   2 mixers and 0 toasters.E) A) and B)
F) None of the above

Question 10

Table 3-16 Summary of the Gains from Trade
 
-Refer to Table 3-16.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) C) and D)
F) A) and C)

Question 11

Figure 3-6
 
-Refer to Figure 3-6.If the production possibilities frontiers shown are each for one day of work,then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Accepted Answer

A)   2 pies and 25 tarts
B)   10 pies and 22 tarts
C)   12 pies and 15 tarts
D)   15 pies and 16 tartsE) A) and D)
F) None of the above

Question 12

Figure 3-4
 
-Refer to Figure 3-4.If Perry and Jordan both spend all of their time writing poems,then total production is

Accepted Answer

A)   3 poems.
B)   6 poems.
C)   12 poems.
D)   24 poems.E) All of the above
F) B) and C)

Question 13

If labor in Mexico is less productive than labor in the United States in all areas of production,

Accepted Answer

A)   then neither nation can benefit from trade.
B)   then Mexico can benefit from trade but the United States cannot.
C)   then the United States will have a comparative advantage relative to Mexico in the production of all goods.
D)   then both Mexico and the United States still can benefit from trade.E) A) and B)
F) A) and C)

Question 14

Differences in opportunity cost allow for gains from trade.

Accepted Answer

A) True 
 B)False

Question 15

Figure 3-2
Peru's Production Possibilities Frontier
 
-Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Accepted Answer

A)   7 emeralds and 40 rubies
B)   5 emeralds and 92 rubies
C)   3 emeralds and 165 rubies
D)   2 emeralds and 180 rubiesE) B) and D)
F) B) and C)

Question 16

Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
 
-Refer to Table 3-5.England should export

Accepted Answer

A)   cheese and import bread.
B)   bread and import cheese.
C)   both goods and import neither good.
D)   neither good and import both goods.E) A) and B)
F) B) and C)

Question 17

Figure 3-7
 
-Refer to Figure 3-7.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.E) All of the above
F) None of the above

Question 18

Figure 3-7
 
-Refer to Figure 3-7.If the production possibilities frontier shown for Juba is for 2 hours of work,then how long does it take Juba to make one bowl?

Accepted Answer

A)   1/8 hour
B)   1/2 hour
C)   2 hours
D)   8 hoursE) A) and C)
F) A) and D)

Question 19

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year.Each nation has 100 workers,and each country specializes according to the principle of comparative advantage.If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year,then each country's maximum consumption of new radios and televisions per year will be

Accepted Answer

A)   higher than it would be in the absence of trade because of the gains from trade.
B)   the same as it would be in the absence of trade.
C)   less than it would be in the absence of trade because neither country is specializing in the product in which it has a comparative advantage.
D)   less than it would be in the absence of trade because Teeveeland has an absolute advantage in both goods and so it cannot benefit by trading with Radioland.E) B) and C)
F) C) and D)

Question 20

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.For many years the two countries traded,each completely specializing according to their respective comparative advantages.Now,however,war has broken out between them and all trade has stopped.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.The war has caused the combined yearly output of the two countries to decline by

Accepted Answer

A)   10 units of corn and 10 units of wheat.
B)   20 units of corn and 20 units of wheat.
C)   30 units of corn and 30 units of wheat.
D)   40 units of corn and 40 units of wheat.E) None of the above
F) A) and B)

Exam 3: Interdependence and the Gains from Trade.

Figure 3-4 -Refer to Figure 3-4.If Perry and Jordan both spend all of their time writing poems,then total production is

Correct Answer
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Figure 3-4 -Refer to Figure 3-4.If the production possibilities frontier shown for Perry is for 6 months of writing,then how long does it take Perry to write one poem?

Correct Answer
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Figure 3-7 -Refer to Figure 3-7.Bintu has an absolute advantage in the production of

Correct Answer
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Figure 3-6 -Refer to Figure 3-6.If the production possibilities frontiers shown are each for one day of work,then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Correct Answer
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Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.England should export

Correct Answer
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Figure 3-7 -Refer to Figure 3-7.If the production possibilities frontier shown for Juba is for 2 hours of work,then how long does it take Juba to make one bowl?

Correct Answer
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Table 3-9 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 3-9.Jim has an absolute advantage in

Correct Answer
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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.Which of the following combinations of mixers and toasters could Miguel not produce in 90 hours?

Correct Answer
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Differences in opportunity cost allow for gains from trade.

Correct Answer
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The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

Correct Answer
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Table 3-16 Summary of the Gains from Trade -Refer to Table 3-16.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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Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Correct Answer
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For a self-sufficient producer,the production possibilities frontier

Correct Answer
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Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan's opportunity cost of one car is

Correct Answer
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Adam Smith asserted that a person should never attempt to make at home

Correct Answer
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If labor in Mexico is less productive than labor in the United States in all areas of production,

Correct Answer
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Figure 3-6 -Refer to Figure 3-6.Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy.Which of the following combinations of pies and tarts could Maxine not then consume,assuming Maxine specializes in making pies and Daisy specializes in making tarts?

Correct Answer
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Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Aruba has an absolute advantage in the production of

Correct Answer
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Exam 3: Interdependence and the Gains from Trade.

Figure 3-4 -Refer to Figure 3-4.If Perry and Jordan both spend all of their time writing poems,then total production is

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4.If the production possibilities frontier shown for Perry is for 6 months of writing,then how long does it take Perry to write one poem?

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7.Bintu has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6.If the production possibilities frontiers shown are each for one day of work,then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Correct AnswerverifiedShow Answer

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.England should export

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7.If the production possibilities frontier shown for Juba is for 2 hours of work,then how long does it take Juba to make one bowl?

Correct AnswerverifiedShow Answer

Table 3-9 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 3-9.Jim has an absolute advantage in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.Which of the following combinations of mixers and toasters could Miguel not produce in 90 hours?

Correct AnswerverifiedShow Answer

Differences in opportunity cost allow for gains from trade.

Correct AnswerverifiedShow Answer

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

Correct AnswerverifiedShow Answer

Table 3-16 Summary of the Gains from Trade -Refer to Table 3-16.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 AnswerverifiedShow Answer

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Correct AnswerverifiedShow Answer

For a self-sufficient producer,the production possibilities frontier

Correct AnswerverifiedShow Answer

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Japan's opportunity cost of one car is

Correct AnswerverifiedShow Answer

Adam Smith asserted that a person should never attempt to make at home

Correct AnswerverifiedShow Answer

If labor in Mexico is less productive than labor in the United States in all areas of production,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Aruba has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

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