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The most obvious benefit of specialization and trade is that they allow us to


A) work more hours per week than we otherwise would be able to work.
B) consume more goods than we otherwise would be able to consume.
C) spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.
D) consume more goods by forcing people in other countries to consume fewer goods.

E) All of the above
F) B) and D)

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Table 3-8 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. Table 3-8 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-8. At which of the following prices would both Huang and Min gain from trade with each other? A) 15 parasols for 10 plates B) 15 parasols for 6 plates C) 15 parasols for 3 plates D) Huang and Min could not both gain from trade with each other at any price. -Refer to Table 3-8. At which of the following prices would both Huang and Min gain from trade with each other?


A) 15 parasols for 10 plates
B) 15 parasols for 6 plates
C) 15 parasols for 3 plates
D) Huang and Min could not both gain from trade with each other at any price.

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

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Figure 3-5 Figure 3-5 -Refer to Figure 3-5. Hosne has a comparative advantage in the production of A) purses and Merve has a comparative advantage in the production of wallets. B) wallets and Merve has a comparative advantage in the production of purses. C) both goods and Merve has a comparative advantage in the production of neither good. D) neither good and Merve has a comparative advantage in the production of both goods. Figure 3-5 -Refer to Figure 3-5. Hosne has a comparative advantage in the production of A) purses and Merve has a comparative advantage in the production of wallets. B) wallets and Merve has a comparative advantage in the production of purses. C) both goods and Merve has a comparative advantage in the production of neither good. D) neither good and Merve has a comparative advantage in the production of both goods. Figure 3-5 -Refer to Figure 3-5. Hosne has a comparative advantage in the production of A) purses and Merve has a comparative advantage in the production of wallets. B) wallets and Merve has a comparative advantage in the production of purses. C) both goods and Merve has a comparative advantage in the production of neither good. D) neither good and Merve has a comparative advantage in the production of both goods. -Refer to Figure 3-5. Hosne has a comparative advantage in the production of


A) purses and Merve has a comparative advantage in the production of wallets.
B) wallets and Merve has a comparative advantage in the production of purses.
C) both goods and Merve has a comparative advantage in the production of neither good.
D) neither good and Merve has a comparative advantage in the production of both goods.

E) A) and B)
F) All of the above

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Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. What is Zardia's opportunity cost of producing one bushel of wheat? A) 2/3 pound of beef B) 3/4 pound of beef C) 5/6 pound of beef D) 3/2 pounds of beef -Refer to Table 3-1. What is Zardia's opportunity cost of producing one bushel of wheat?


A) 2/3 pound of beef
B) 3/4 pound of beef
C) 5/6 pound of beef
D) 3/2 pounds of beef

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

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Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. 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. Iceland should export A) coolers and import radios. B) radios and import coolers. C) both goods and import neither good. D) neither good and import both goods. -Refer to Table 3-2. Iceland should export


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 C)
F) A) and D)

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Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. 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 has an absolute advantage in the production of 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. -Refer to Table 3-7. Japan has an absolute advantage in the production of


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) A) and D)
F) B) and D)

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Figure 3-3 Figure 3-3 -Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is A) 200 tacos and 150 burritos. B) 400 tacos and 250 burritos. C) 400 tacos and 300 burritos. D) 800 tacos and 500 burritos. Figure 3-3 -Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is A) 200 tacos and 150 burritos. B) 400 tacos and 250 burritos. C) 400 tacos and 300 burritos. D) 800 tacos and 500 burritos. Figure 3-3 -Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is A) 200 tacos and 150 burritos. B) 400 tacos and 250 burritos. C) 400 tacos and 300 burritos. D) 800 tacos and 500 burritos. -Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is


A) 200 tacos and 150 burritos.
B) 400 tacos and 250 burritos.
C) 400 tacos and 300 burritos.
D) 800 tacos and 500 burritos.

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

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Figure 3-4 Figure 3-4 -Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is A) 2 novels and 6 poems. B) 3 novels and 12 poems. C) 4 novels and 12 poems. D) 6 novels and 24 poems. Figure 3-4 -Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is A) 2 novels and 6 poems. B) 3 novels and 12 poems. C) 4 novels and 12 poems. D) 6 novels and 24 poems. Figure 3-4 -Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is A) 2 novels and 6 poems. B) 3 novels and 12 poems. C) 4 novels and 12 poems. D) 6 novels and 24 poems. -Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is


A) 2 novels and 6 poems.
B) 3 novels and 12 poems.
C) 4 novels and 12 poems.
D) 6 novels and 24 poems.

E) B) and C)
F) All of the above

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Table 3-12 Table 3-12 -Refer to Table 3-12. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours? 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. -Refer to Table 3-12. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?


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) A) and D)

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Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. 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. The opportunity cost of 1 unit of bread for Spain is A) 1/2 unit of cheese. B) 1/2 hour of labor. C) 2 units of cheese. D) 8 hours of labor. -Refer to Table 3-5. The opportunity cost of 1 unit of bread for Spain is


A) 1/2 unit of cheese.
B) 1/2 hour of labor.
C) 2 units of cheese.
D) 8 hours of labor.

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

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Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade? A) Alice produces more pizzas and Betty produces more lemonade. B) Alice produces more lemonade and Betty produces more pizzas. C) Both Alice and Betty produce only pizzas. D) There are no circumstances under which both Alice and Betty can benefit from specialization and trade. Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade? A) Alice produces more pizzas and Betty produces more lemonade. B) Alice produces more lemonade and Betty produces more pizzas. C) Both Alice and Betty produce only pizzas. D) There are no circumstances under which both Alice and Betty can benefit from specialization and trade. Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade? A) Alice produces more pizzas and Betty produces more lemonade. B) Alice produces more lemonade and Betty produces more pizzas. C) Both Alice and Betty produce only pizzas. D) There are no circumstances under which both Alice and Betty can benefit from specialization and trade. -Refer to Figure 3-10. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade?


A) Alice produces more pizzas and Betty produces more lemonade.
B) Alice produces more lemonade and Betty produces more pizzas.
C) Both Alice and Betty produce only pizzas.
D) There are no circumstances under which both Alice and Betty can benefit from specialization and trade.

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

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Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1. Which of the following combinations of wheat and beef could Andia produce in one 8-hour day? A) 6 bushels of wheat and 35 pounds of beef B) 9 bushels of wheat and 25 pounds of beef C) 15 bushels of wheat and 20 pounds of beef D) 24 bushels of wheat and 40 pounds of beef -Refer to Table 3-1. Which of the following combinations of wheat and beef could Andia produce in one 8-hour day?


A) 6 bushels of wheat and 35 pounds of beef
B) 9 bushels of wheat and 25 pounds of beef
C) 15 bushels of wheat and 20 pounds of beef
D) 24 bushels of wheat and 40 pounds of beef

E) All of the above
F) B) and C)

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Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. 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. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring bread along the horizontal axis, then A) the slope of England's production possibilities frontier would be -4 and the slope of Spain's production possibilities frontier would be -2. B) the slope of England's production possibilities frontier would be -0.25 and the slope of Spain's production possibilities frontier would be -0.5. C) the slope of England's production possibilities frontier would be 0.25 and the slope of Spain's production possibilities frontier would be 0.5. D) the slope of England's production possibilities frontier would be 4 and the slope of Spain's production possibilities frontier would be 2. -Refer to Table 3-5. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring bread along the horizontal axis, then


A) the slope of England's production possibilities frontier would be -4 and the slope of Spain's production possibilities frontier would be -2.
B) the slope of England's production possibilities frontier would be -0.25 and the slope of Spain's production possibilities frontier would be -0.5.
C) the slope of England's production possibilities frontier would be 0.25 and the slope of Spain's production possibilities frontier would be 0.5.
D) the slope of England's production possibilities frontier would be 4 and the slope of Spain's production possibilities frontier would be 2.

E) A) and B)
F) None of the above

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Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?


A) Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks.
B) Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks.
C) Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats.
D) Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

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

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As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne's production possibilities frontier is a straight line if


A) she faces no trade-off between writing term papers and completing homework assignments.
B) she can switch between writing term papers and completing homework assignments at a constant rate.
C) the rate at which she can switch between homework assignments and term papers depends on the number of homework assignments she is completing and on the number of term papers she is writing.
D) she is required by her professors to spend half of her time on term papers and the other half of her time on homework assignments.

E) A) and C)
F) None of the above

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Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. 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. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes? A) 1 toothbrush and 4 hairbrushes B) 4 toothbrushes and 2 hairbrushes C) 5 toothbrushes and 6 hairbrushes D) 6 toothbrushes and 5 hairbrushes -Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?


A) 1 toothbrush and 4 hairbrushes
B) 4 toothbrushes and 2 hairbrushes
C) 5 toothbrushes and 6 hairbrushes
D) 6 toothbrushes and 5 hairbrushes

E) B) and C)
F) All of the above

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Table 3-12 Table 3-12 -Refer to Table 3-1. For the farmer, 12.8 pounds of A) meat is the opportunity cost of 10.6 pounds of potatoes. B) meat is the opportunity cost of 16.0 pounds of potatoes. C) potatoes is the opportunity cost of 6.8 pounds of meat. D) potatoes is the opportunity cost of 8.0 pounds of meat. -Refer to Table 3-1. For the farmer, 12.8 pounds of


A) meat is the opportunity cost of 10.6 pounds of potatoes.
B) meat is the opportunity cost of 16.0 pounds of potatoes.
C) potatoes is the opportunity cost of 6.8 pounds of meat.
D) potatoes is the opportunity cost of 8.0 pounds of meat.

E) C) and D)
F) All of the above

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Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

A) True
B) False

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Figure 3-3 Figure 3-3 -Refer to Figure 3-3. Arturo's opportunity cost of one burrito is A) 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco. B) 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos. C) 4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco. D) 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos. Figure 3-3 -Refer to Figure 3-3. Arturo's opportunity cost of one burrito is A) 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco. B) 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos. C) 4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco. D) 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos. Figure 3-3 -Refer to Figure 3-3. Arturo's opportunity cost of one burrito is A) 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco. B) 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos. C) 4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco. D) 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos. -Refer to Figure 3-3. Arturo's opportunity cost of one burrito is


A) 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco.
B) 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos.
C) 4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco.
D) 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos.

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

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Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. 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. Which of the following combinations of cheese and bread could Spain produce in 40 hours? A) 2.25 units of cheese and 4 units of bread. B) 5.5 units of cheese and 3 units of bread. C) 7 units of cheese and 1.5 units of bread. D) 10 units of cheese and 5 units of bread. -Refer to Table 3-5. Which of the following combinations of cheese and bread could Spain produce in 40 hours?


A) 2.25 units of cheese and 4 units of bread.
B) 5.5 units of cheese and 3 units of bread.
C) 7 units of cheese and 1.5 units of bread.
D) 10 units of cheese and 5 units of bread.

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

Correct Answer

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