Question 1

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

Question 2

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes.
B)   1 pound of meat and 2 pounds of potatoes and the rancher gained 1 pound of meat and 4 pounds of potatoes.
C)   3 pounds of meat and 6 pounds of potatoes and the rancher gained 5 pounds of meat and 6 pounds of potatoes.
D)   4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes.E) None of the above
F) All of the above

Question 4

A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

Accepted Answer

A)   is equal to 0.
B)   is between 0 and 1.
C)   is equal to 1.
D)   is greater than 1.E) None of the above
F) C) and D)

Question 5

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-3. Zimbabwe has an absolute advantage in the production of

Accepted Answer

A)   toothbrushes and a comparative advantage in the production of toothbrushes.
B)   toothbrushes and a comparative advantage in the production of hairbrushes.
C)   hairbrushes and a comparative advantage in the production of toothbrushes.
D)   hairbrushes and a comparative advantage in the production of hairbrushes.E) All of the above
F) B) and C)

Question 6

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. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?

Accepted Answer

A)   9 airplanes
B)   15 airplanes
C)   135 airplanes
D)   225 airplanesE) B) and C)
F) A) and D)

Question 7

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 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) A) and D)

Question 8

Which of the following statements is not correct?

Accepted Answer

A)   Trade allows for specialization.
B)   Trade has the potential to benefit all nations.
C)   Trade allows nations to consume outside of their production possibilities curves.
D)   Absolute advantage is the driving force of specialization.E) B) and C)
F) All of the above

Question 9

Table 3-12
 
-Refer to Table 3-1. Relative to the rancher, the farmer has a comparative advantage in the production of

Accepted Answer

A)   meat, but not in the production of potatoes.
B)   potatoes, but not in the production of meat.
C)   both meat and potatoes.
D)   neither meat nor potatoes.E) A) and D)
F) A) and C)

Question 10

Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds)  that the nation of Bonovia could produce in a given month.
 
-Refer to Figure 3-11. In the nation of Cropitia, the opportunity cost of a pound of cheese is 1.5 pounds of ham. Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for

Accepted Answer

A)   1.0 pound of ham.
B)   1.4 pounds of ham.
C)   2.1 pounds of ham.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 11

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.
   
-Refer to Figure 3-10. Which of the following statements is correct regarding comparative advantage?

Accepted Answer

A)   Alice has a comparative advantage in the production of both lemonade and pizzas.
B)   Betty has a comparative advantage in the production of both lemonade and pizzas.
C)   Alice has a comparative advantage in the production of pizzas while Betty has a comparative advantage in the production of lemonade.
D)   Alice has a comparative advantage in the production of lemonade while Betty has a comparative advantage in the production of pizzas.E) None of the above
F) A) and D)

Question 12

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
 
-Refer to Table 3-4. The farmer should specialize in the production of

Accepted Answer

A)   meat and the rancher should specialize in the production of potatoes.
B)   potatoes and the rancher should specialize in the production of meat.
C)   both goods and the rancher should specialize in the production of neither good.
D)   neither good and the rancher should specialize in the production of both goods.E) A) and D)
F) B) and C)

Question 13

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. Korea has an absolute advantage in the production of

Accepted Answer

A)   cars and a comparative advantage in the production of cars.
B)   cars and a comparative advantage in the production of airplanes.
C)   neither good and a comparative advantage in the production of cars.
D)   neither good and a comparative advantage in the production of airplanes.E) None of the above
F) A) and B)

Question 14

In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

Accepted Answer

A) True 
 B)False

Question 15

Figure 3-8
   
-Refer to Figure 3-8. Chile's opportunity cost of one pound of coffee is

Accepted Answer

A)   3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans.
B)   3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans.
C)   4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans.
D)   4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans.E) B) and C)
F) None of the above

Question 16

Table 3-12
 
-Refer to Table 3-1. In 10 hours,

Accepted Answer

A)   the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes.
B)   the rancher could produce 1.0 pound of meat and 1.0 pound of potatoes.
C)   the farmer could produce 0.25 pounds of meat and 1.6 pounds of potatoes.
D)   the farmer could produce 0.75 pounds of meat and 1.25 pounds of potatoes.E) All of the above
F) None of the above

Question 17

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 should export

Accepted Answer

A)   coolers and import radios.
B)   radios and import coolers.
C)   both goods and import neither good.
D)   neither good and import both goods.E) B) and D)
F) A) and B)

Question 18

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Accepted Answer

A) True 
 B)False

Question 19

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. The opportunity cost of 1 mixer for Maya is

Accepted Answer

A)   0.625 toasters.
B)   5 hours of labor.
C)   1.6 toasters.
D)   20 hours of labor.E) B) and C)
F) None of the above

Question 20

Production possibilities frontiers cannot be used to illustrate tradeoffs.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Correct Answer
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Table 3-12 -Refer to Table 3-1. Relative to the rancher, the farmer has a comparative advantage in the production of

Correct Answer
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A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

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. The opportunity cost of 1 mixer for Maya is

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. Korea has an absolute advantage in the production of

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 should export

Correct Answer
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Table 3-12 -Refer to Table 3-1. In 10 hours,

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Which of the following statements is not correct?

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Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Correct Answer
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Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. Which of the following statements is correct regarding comparative advantage?

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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In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

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. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?

Correct Answer
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Production possibilities frontiers cannot be used to illustrate tradeoffs.

Correct Answer
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Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-4. The farmer should specialize in the production of

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 has a comparative advantage in the production of

Correct Answer
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Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Zimbabwe has an absolute advantage in the production of

Correct Answer
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Figure 3-8 -Refer to Figure 3-8. Chile's opportunity cost of one pound of coffee is

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Correct AnswerverifiedShow Answer

Table 3-12 -Refer to Table 3-1. Relative to the rancher, the farmer has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

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. The opportunity cost of 1 mixer for Maya is

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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. Korea has an absolute advantage in the production of

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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 should export

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Table 3-12 -Refer to Table 3-1. In 10 hours,

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Which of the following statements is not correct?

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Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

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Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. Which of the following statements is correct regarding comparative advantage?

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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?

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In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.

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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. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?

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Production possibilities frontiers cannot be used to illustrate tradeoffs.

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Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. -Refer to Table 3-4. The farmer should specialize in the production of

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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 has a comparative advantage in the production of

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Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Zimbabwe has an absolute advantage in the production of

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Figure 3-8 -Refer to Figure 3-8. Chile's opportunity cost of one pound of coffee is

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