Question 1

Table 3-5
 
-Refer to Table 3-5.Which country has an absolute or comparative advantage in each product

Accepted Answer

A)  Japan has an absolute advantage in both goods, and Canada has a comparative advantage in cars.
B)  Japan has an absolute advantage in both goods, and Canada has a comparative advantage in neither good.
C)  Japan has an absolute advantage in cars, and Canada has a comparative advantage in airplanes.
D)  Japan has an absolute advantage in airplanes, and Canada has a comparative advantage in cars.E) A) and B)
F) A) and C)

Question 2

Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour.
 
-Refer to Figure 3-5.Who has a comparative or absolute advantage in what product

Accepted Answer

A)  Ginger has an absolute advantage in tap shoes, and Fred has a comparative advantage in ballet slippers.
B)  Ginger has an absolute advantage in both goods, and Fred has a comparative advantage in neither good.
C)  Ginger has an absolute advantage in ballet slippers, and Fred has a comparative advantage in tap shoes.
D)  Ginger has an absolute advantage in neither good, and Fred has a comparative advantage in both goods.E) B) and D)
F) B) and C)

Question 3

Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 6 tables or 18 chairs,where Sandy can make 5 tables or 25 chairs.Who has a comparative advantage in which product

Accepted Answer

A)  Mike in chairs, Sandy in tables
B)  both Mike and Sandy in tables
C)  both Mike and Sandy in chairs
D)  Mike in tables, Sandy in chairsE) C) and D)
F) None of the above

Question 4

Table 3-3
 
-Refer to Table 3-3.What does each of the two producers have an absolute advantage in

Accepted Answer

A)  Kevin has an absolute advantage in blankets, and Amy has an absolute advantage in sweaters.
B)  Kevin has an absolute advantage in sweaters, and Amy has an absolute advantage in blankets.
C)  Kevin has an absolute advantage in neither good, and Amy has an absolute advantage in both goods.
D)  Kevin has an absolute advantage in both goods, and Amy has an absolute advantage in neither good.E) A) and C)
F) All of the above

Question 5

Janet and Patricia work for a home cleaning company and they form a team.In each room,there are two broad cleaning areas: floor and windows.Janet can do a floor in 40 minutes and windows in 25 minutes.Patricia does floors in 30 minutes and windows in 30 minutes.
a.How long does it take to clean an apartment with 4 rooms if Janet takes 2 rooms and Patricia takes 2 rooms,assuming that if one finishes earlier she takes a break waiting for the other
b.Later on,they decide that if one finishes earlier she would help the other to finish so that they can move on to another client.How long does it take now to finish
c.After a while,they realize that it is better if one does the floors in all rooms and the other does the windows.How long does it take now?

Accepted Answer

a.It takes Janet 130 minutes to finish h...

Question 6

Table 3-3
 
-Refer to Table 3-3.What is the opportunity cost of one sweater for Amy

Accepted Answer

A)  2 blankets
B)  3 blankets
C)  4 blankets
D)  5 blanketsE) A) and B)
F) A) and C)

Question 7

What is David Ricardo's contribution

Accepted Answer

A)  He wrote books opposing the ideas of Adam Smith.
B)  He was the founder of modern economics.
C)  He argued in favour of Britain following a free-trade policy.
D)  He wrote An Inquiry into the Nature and Causes of the Wealth of Nations.E) All of the above
F) B) and C)

Question 8

Table 3-6
 
-Refer to Table 3-6.How could Denmark and Italy benefit

Accepted Answer

A)  by Denmark specializing in bread and Italy specializing in cheese
B)  by Denmark specializing in cheese and Italy specializing in bread
C)  by Denmark specializing in both goods and Italy specializing in neither good
D)  by Denmark specializing in neither good and Italy specializing in both goodsE) All of the above
F) A) and C)

Question 9

Figure 3-1
 
-Refer to Figure 3-1.What is the opportunity cost of 1 bushel of wheat for Cliff

Accepted Answer

A)  1/3 bushel of corn
B)  2/3 bushel of corn
C)  1 bushel of corn
D)  3/2 bushels of cornE) B) and C)
F) C) and D)

Question 10

What is trade based on

Accepted Answer

A)  absolute advantage
B)  comparative advantage
C)  production costs
D)  relative dollar pricesE) All of the above
F) A) and B)

Question 11

What happens when countries specialize according to their comparative advantage

Accepted Answer

A)  It is possible to increase world output of all goods.
B)  It is possible to increase world output of some goods only by reducing the output of others.
C)  One country is likely to gain from trade while others lose.
D)  All countries will lose from trade.E) A) and B)
F) A) and C)

Question 12

Table 3-4
 
-Refer to the table.What is the opportunity cost of one basket for Manitoba

Accepted Answer

A)  1/4 birdhouse
B)  3/4 birdhouse
C)  1 birdhouse
D)  4/3 birdhousesE) A) and C)
F) All of the above

Question 13

Figure 3-4

-Refer to Figure 3-4.For Ben,what is the opportunity cost of one bottle of beer

Accepted Answer

A)  1/2 bottle of wine
B)  1/4 bottle of wine
C)  2 bottles of wine
D)  4 bottles of wineE) A) and B)
F) A) and C)

Question 14

Mark is a computer company executive and earns $200 per hour managing the company and promoting its products.His daughter Regan is a high school student and earns $12 per hour helping her grandmother on the farm.Mark's computer is broken.He can repair it himself in one hour.Regan can repair it in 10 hours.Mark has a comparative advantage repairing the computer.

Accepted Answer

A) True 
 B)False

Question 15

Shawn can produce donuts at a lower opportunity cost than Sue.Who has an absolute or a comparative advantage in the production of donuts

Accepted Answer

A)  Shawn has a comparative advantage.
B)  Sue has a comparative advantage.
C)  Shawn has an absolute advantage.
D)  Sue has an absolute advantage.E) A) and D)
F) A) and C)

Question 16

Spain and Germany can both produce fish and cars.Spain has a comparative advantage in cars,but Germany has an absolute advantage in cars.What would Germany import from Spain

Accepted Answer

A)  Nothing, because Germany has a comparative advantage in fish and an absolute advantage in cars.
B)  Cars, because it is relatively cheaper for Spain to produce them.
C)  Fish, because Germany can produce cars cheaper than Spain.
D)  Both fish and cars, because Germany's absolute advantage in cars creates more income.E) A) and B)
F) B) and C)

Question 17

Table 3-6
 
-Refer to Table 3-6.If Denmark and Italy specialize and trade according to their respective comparative advantage,who gains in the short run in Denmark

Accepted Answer

A)  owners of cheese-producing companies
B)  owners of milk-producing companies
C)  consumers who like cheese
D)  consumers who like breadE) A) and B)
F) A) and C)

Question 18

Figure 3-3
Ice cream and cones are measured in kilograms.
 
-Refer to Figure 3-3.What does each of the two producers have a comparative or absolute advantage in

Accepted Answer

A)  Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in both goods.
B)  Ben has a comparative advantage in cones, and Jerry has an absolute advantage in ice cream.
C)  Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in neither good.
D)  Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in cones.E) A) and B)
F) All of the above

Question 19

Figure 3-6
These figures illustrate the production possibilities available to Barney and Betty with eight hours of labour in their bakery.
 
-Refer to Figure 3-6.Who has an absolute advantage in each product

Accepted Answer

A)  Barney has an absolute advantage in both goods, and Betty has an absolute advantage in neither good.
B)  Barney has an absolute advantage in loaves of bread, and Betty has an absolute advantage in pies.
C)  Barney has an absolute advantage in neither good, and Betty has an absolute advantage in both goods.
D)  Barney has an absolute advantage in pies, and Betty has an absolute advantage in loaves of bread.E) All of the above
F) A) and D)

Question 20

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.If the two countries do not trade,Cornland will produce and consume 400 bushels of corn and 100 bushels of oats,while Oatland will produce and consume 50 bushels of corn and 500 bushels of oats.Combined output for the two countries would therefore be 450 bushels of corn and 600 bushels of oats.If the two countries do trade,each will completely specialize in producing the crop for which it has a comparative advantage.If trade occurs,by what amount will the combined output for the two countries increase

Accepted Answer

A)  200 bushels of corn and 200 bushels of oats
B)  350 bushels of corn and 400 bushels of oats
C)  400 bushels of corn and 500 bushels of oats
D)  800 bushels of corn and 1000 bushels of oatsE) B) and C)
F) A) and B)

Exam 3: Interdependence and the Gains From Trade

Correct Answer
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Table 3-6 -Refer to Table 3-6.If Denmark and Italy specialize and trade according to their respective comparative advantage,who gains in the short run in Denmark

Correct Answer
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Table 3-6 -Refer to Table 3-6.How could Denmark and Italy benefit

Correct Answer
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Figure 3-6 These figures illustrate the production possibilities available to Barney and Betty with eight hours of labour in their bakery. -Refer to Figure 3-6.Who has an absolute advantage in each product

Correct Answer
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Table 3-3 -Refer to Table 3-3.What is the opportunity cost of one sweater for Amy

Correct Answer
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Shawn can produce donuts at a lower opportunity cost than Sue.Who has an absolute or a comparative advantage in the production of donuts

Correct Answer
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Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.Who has a comparative or absolute advantage in what product

Correct Answer
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Figure 3-1 -Refer to Figure 3-1.What is the opportunity cost of 1 bushel of wheat for Cliff

Correct Answer
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What happens when countries specialize according to their comparative advantage

Correct Answer
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Correct Answer
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a.It takes Janet 130 minutes to finish h...
View Answer

Spain and Germany can both produce fish and cars.Spain has a comparative advantage in cars,but Germany has an absolute advantage in cars.What would Germany import from Spain

Correct Answer
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Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 6 tables or 18 chairs,where Sandy can make 5 tables or 25 chairs.Who has a comparative advantage in which product

Correct Answer
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Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.What does each of the two producers have a comparative or absolute advantage in

Correct Answer
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Figure 3-4 -Refer to Figure 3-4.For Ben,what is the opportunity cost of one bottle of beer

Correct Answer
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Table 3-4 -Refer to the table.What is the opportunity cost of one basket for Manitoba

Correct Answer
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What is trade based on

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Table 3-3 -Refer to Table 3-3.What does each of the two producers have an absolute advantage in

Correct Answer
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Table 3-5 -Refer to Table 3-5.Which country has an absolute or comparative advantage in each product

Correct Answer
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What is David Ricardo's contribution

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Exam 3: Interdependence and the Gains From Trade

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Table 3-6 -Refer to Table 3-6.If Denmark and Italy specialize and trade according to their respective comparative advantage,who gains in the short run in Denmark

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Table 3-6 -Refer to Table 3-6.How could Denmark and Italy benefit

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Figure 3-6 These figures illustrate the production possibilities available to Barney and Betty with eight hours of labour in their bakery. -Refer to Figure 3-6.Who has an absolute advantage in each product

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Table 3-3 -Refer to Table 3-3.What is the opportunity cost of one sweater for Amy

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Shawn can produce donuts at a lower opportunity cost than Sue.Who has an absolute or a comparative advantage in the production of donuts

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Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.Who has a comparative or absolute advantage in what product

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Figure 3-1 -Refer to Figure 3-1.What is the opportunity cost of 1 bushel of wheat for Cliff

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What happens when countries specialize according to their comparative advantage

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Correct Answerverifieda.It takes Janet 130 minutes to finish h...View AnswerShow Answer

Spain and Germany can both produce fish and cars.Spain has a comparative advantage in cars,but Germany has an absolute advantage in cars.What would Germany import from Spain

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Mike and Sandy are two woodworkers who both make tables and chairs.In one month,Mike can make 6 tables or 18 chairs,where Sandy can make 5 tables or 25 chairs.Who has a comparative advantage in which product

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Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3.What does each of the two producers have a comparative or absolute advantage in

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Figure 3-4 -Refer to Figure 3-4.For Ben,what is the opportunity cost of one bottle of beer

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Table 3-4 -Refer to the table.What is the opportunity cost of one basket for Manitoba

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What is trade based on

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Table 3-3 -Refer to Table 3-3.What does each of the two producers have an absolute advantage in

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Table 3-5 -Refer to Table 3-5.Which country has an absolute or comparative advantage in each product

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What is David Ricardo's contribution

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a.It takes Janet 130 minutes to finish h...
View Answer

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