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Exam 2: Specialization and Exchange

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Question 41

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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. A bundle of goods that Country A could potentially make would be:

A) (500 iPods, 500 tablets) .
B) (500 iPods, 400 tablets) .
C) (500 iPods, 300 tablets) .
D) (500 iPods, 200 tablets) .

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

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Question 42

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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Suppose Country B's population of workers increased to 600. Which of the following statements is now true?

A) Country B's production possibilities curve has rotated out for only production of iPods.
B) Country B's production possibilities curve has shifted straight out.
C) Country B's production possibilities curve has shifted straight in.
D) Country B's production possibilities are now more limited because of crowding from having more workers.

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

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Question 43

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A production possibilities frontier is a line or curve that:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Assuming both countries have the same amount of resources available to them, which of the following statements is true? Country A has:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Which of the following is true? The opportunity cost of:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. For a worker in Country A, the trade-off of making one tomato is:

Consider the production possibilities frontier displayed in the figure shown. If this society chooses to produce 15 watermelons in can produce no more than:

Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. If Jerry decides to specialize in building fences, what are the limits to his terms of trade?

Economic theory states that losing comparative advantage in one good means creating a comparative advantage in another. This suggests that:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Country A has the absolute advantage in the production of:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B Which of the following statements is true? The opportunity cost of a truck in Country A is:

Suppose that only two goods are produced in an economy. If a country possesses the comparative advantage in the production of one good then it:

If the opportunity cost of producing corn is lower for Ohio than for Iowa, then:

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for the United States is:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Two possible consumption bundles that Country A could produce are:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of one pair of shoes for the United States is _______, while the opportunity cost of one pair of shoes for Canada is _________.

Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is true?

When nations trade the result would most likely be:

Consider the production possibilities frontier in the figure shown. As more and more cigars are produced the opportunity cost of producing more cigars: