Question 1

Table 3-35 
-Refer to Table 3-35. Which good(s)  does Denmark have an absolute advantage producing?

Accepted Answer

A)   both eggs and ham.
B)   eggs but not ham.
C)   ham but not eggs.
D)   neither ham nor eggs.E) A) and D)
F) A) and B)

Question 2

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 Paul not produce in one 8-hour day?

Accepted Answer

A)   13 bushels of wheat and 60 pounds of beef
B)   20 bushels of wheat and 30 pounds of beef
C)   20 bushels of wheat and 20 pounds of beef
D)   25 bushels of wheat and 15 pounds of beefE) All of the above
F) A) and C)

Question 3

Table 3-35 
-Refer to Table 3-35. Denmark's opportunity cost of producing 1dozen eggs is

Accepted Answer

A)   5/4 pounds of ham. This is higher than Finland's opportunity cost of producing 1dozen eggs.
B)   5/4 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs.
C)   4/5 pounds of ham. This is higher than Finland's opportunity cost of producing 1 dozen eggs.
D)   4/5 pounds of ham. This is lower than Finland's opportunity cost of producing 1 dozen eggs.E) A) and D)
F) A) and C)

Question 4

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 5

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Accepted Answer

Yes. Greg has a comparative ad...

Question 6

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

Accepted Answer

A)   Howard is very good at knitting sweaters and at cooking tasty food, but Mai's skills in both of these activities are very poor.
B)   Howard is very good at knitting sweaters and at cooking tasty food; Mai is very good at knitting sweaters, but she knows nothing about cooking tasty food.
C)   Howard's skills in knitting sweaters are fairly good, but his skills in cooking tasty food are fairly bad; Mai's skills in knitting sweaters are fairly bad, but her skills in cooking tasty food are fairly good.
D)   Howard's skills are such that he can produce only sweaters, and Mai's skills are such that she can produce only tasty food.E) All of the above
F) B) and C)

Question 7

Figure 3-6
Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier 
-Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

Accepted Answer

A)   1/4 hour
B)   1/3 hour
C)   3 hours
D)   4 hoursE) A) and D)
F) None of the above

Question 8

Figure 3-20
Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier 
-Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good Y will increase by

Accepted Answer

A)   3 units.
B)   6 units.
C)   9 units.
D)   12 units.E) B) and C)
F) A) and B)

Question 9

Table 3-36 
-Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

Accepted Answer

A)   3/5 umbrellas
B)   2/3 umbrellas
C)   3/2 umbrellas
D)   5/3 umbrellasE) All of the above
F) None of the above

Question 10

Figure 3-22
Alice and Betty's Production Possibilities in one 8­hour 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) A) and B)
F) A) and C)

Question 11

Table 3-15 
-Refer to Table 3-15. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?

Accepted Answer

A)   2 pounds of meat and 3 pounds of potatoes.
B)   3 pounds of meat and 3 pounds of potatoes.
C)   4 pounds of meat and 2 pounds of potatoes.
D)   5 pounds of meat and 2 pound of potatoes.E) B) and C)
F) None of the above

Question 12

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. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume

Accepted Answer

A)   34 units of cheese and 2 units of bread and Spain will consume 6 units of cheese and 3 units of bread.
B)   34 units of cheese and 2 units of bread and Spain will consume 16 units of cheese and 3 units of bread.
C)   34 units of cheese and 12 units of bread and Spain will consume 6 units of cheese and 3 units of bread.
D)   34 units of cheese and 12 units of bread and Spain will consume 16 units of cheese and 3 units of bread.E) C) and D)
F) A) and C)

Question 13

What does a production possibilities frontier represent?

Accepted Answer

The combinations of ...

Question 14

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier 
-Refer to Figure 3-26. Who has a comparative advantage in making cookies?

Accepted Answer

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

Question 15

Adam Smith developed the theory of comparative advantage as we know it today.

Accepted Answer

A) True 
 B)False

Question 16

Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. 
-Refer to Table 3-21. Jamaica's opportunity cost of one cooler is

Accepted Answer

A)   0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios.
B)   0.5 radios, and Norway's opportunity cost of one cooler is 8 radios.
C)   2 radios, and Norway's opportunity cost of one cooler is 0.125 radios.
D)   2 radios, and Norway's opportunity cost of one cooler is 8 radios.E) B) and C)
F) C) and D)

Question 17

Table 3-23
Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. 
-Refer to Table 3-23. Without trade, the farmer produced and consumed 2 pounds of pork and 4 pounds of tomatoes and the rancher produced and consumed 4 pounds of pork and 2 pounds of tomatoes. Then, each person agreed to specialize in the production of the good in which he has a comparative advantage and trade 4 pounds of pork for 6 pounds of tomatoes. As a result,

Accepted Answer

A)   the farmer gained 3 hours worth of production and the rancher gained 4 hours worth of production.
B)   the farmer gained 4 hours worth of production and the rancher gained 6 hours worth of production.
C)   the farmer gained 6 hours worth of production and the rancher gained 8 hours worth of production.
D)   the farmer gained 8 hours worth of production and the rancher gained 10 hours worth of production.E) B) and C)
F) A) and D)

Question 18

Table 3-23
Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. 
-Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is

Accepted Answer

A)   1 pound of tomatoes.
B)   1 hour of labor.
C)   1.5 pounds of tomatoes.
D)   1.5 hours of labor.E) C) and D)
F) A) and B)

Question 19

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

Accepted Answer

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

Question 20

Figure 3-14
Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier 
-Refer to Figure 3-14. Dina has an absolute advantage in the production of

Accepted Answer

A)   burritos and a comparative advantage in the production of tacos.
B)   burritos and a comparative advantage in the production of burritos.
C)   neither good and a comparative advantage in the production of tacos.
D)   neither good and a comparative advantage in the production of burritos.E) A) and B)
F) B) and D)

Exam 3: Interdependence and the Gains From Trade

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

Correct Answer
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Table 3-35 -Refer to Table 3-35. Which good(s) does Denmark have an absolute advantage producing?

Correct Answer
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What does a production possibilities frontier represent?

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The combinations of ...
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Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Dina has an absolute advantage in the production of

Correct Answer
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Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. -Refer to Table 3-21. Jamaica's opportunity cost of one cooler is

Correct Answer
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Table 3-35 -Refer to Table 3-35. Denmark's opportunity cost of producing 1dozen eggs is

Correct Answer
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Adam Smith developed the theory of comparative advantage as we know it today.

Correct Answer
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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 Paul not produce in one 8-hour day?

Correct Answer
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Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. Who has a comparative advantage in making cookies?

Correct Answer
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Figure 3-22 Alice and Betty's Production Possibilities in one 8hour 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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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

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Correct Answer
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Yes. Greg has a comparative ad...
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Table 3-15 -Refer to Table 3-15. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?

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

Correct Answer
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Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. -Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is

Correct Answer
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Table 3-36 -Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

Correct Answer
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Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

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

Correct AnswerverifiedShow Answer

Table 3-35 -Refer to Table 3-35. Which good(s) does Denmark have an absolute advantage producing?

Correct AnswerverifiedShow Answer

What does a production possibilities frontier represent?

Correct AnswerverifiedThe combinations of ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Dina has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. -Refer to Table 3-21. Jamaica's opportunity cost of one cooler is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 3-35 -Refer to Table 3-35. Denmark's opportunity cost of producing 1dozen eggs is

Correct AnswerverifiedShow Answer

Adam Smith developed the theory of comparative advantage as we know it today.

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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 Paul not produce in one 8-hour day?

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Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. Who has a comparative advantage in making cookies?

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Figure 3-22 Alice and Betty's Production Possibilities in one 8­hour 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

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

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. Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Correct AnswerverifiedYes. Greg has a comparative ad...View AnswerShow Answer

Table 3-15 -Refer to Table 3-15. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. -Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is

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Table 3-36 -Refer to Table 3-36. What is Antigua's opportunity cost of one towel?

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Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

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The combinations of ...
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Figure 3-22 Alice and Betty's Production Possibilities in one 8hour 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?

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Absolute advantage refers to productivit...
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Yes. Greg has a comparative ad...
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