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Exam 3: Interdependence and the Gains From Trade

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Question 251

True/False

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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.

A) True
B) False

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Question 252

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

A) Marquis is very good at knitting sweaters and at cooking tasty food, but Serena's skills in both of these activities are very poor.
B) Marquis and Serena both are very good at cooking tasty food, but neither has the necessary skills to knit a sweater.
C) Marquis's cooking and knitting skills are very poor, and Serena's cooking and knitting skills are also very poor.
D) Marquis's skills are such that he can produce only sweaters, and Serena's skills are such that she can produce only tasty food.

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

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Question 253

Multiple Choice

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Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?

Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is

Some countries win in international trade, while other countries lose.

Figure 3-13 Peru's Production Possibilities Frontier -Refer to Figure 3-13. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision?

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. Canada has a comparative advantage in the production of

When can two countries gain from trading two goods?

Figure 3-12 Argentina's Production Possibilities Frontier Peru's Production Possibilities Frontier -Refer to Figure 3-12. If Argentina and Peru each divides its time equally between producing corn and fish, then total production is

Table 3-41 -Refer to Table 3-41. What is Russia's opportunity cost of one compass?

Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. The opportunity cost of 1 cup for Bintu is

Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Japan's opportunity cost of one airplane is

Timmy can edit 2 pages in one minute and he can type 80 words in one minute. Olivia can edit 1 page in one minute and she can type 100 words in one minute. Timmy has an absolute advantage and a comparative advantage in editing, while Olivia has an absolute advantage and a comparative advantage in typing.

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

Table 3-31 -Refer to Table 3-31. In 10 hours,

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. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by

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. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of coolers increased by

Production possibilities frontiers cannot be used to illustrate tradeoffs.

Figure 3-9 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together not make in a given 2-day production period?