Question 1

Opportunity cost refers to how many inputs a producer requires to produce a good.

Accepted Answer

A) True 
 B)False

Question 2

Table 3-8
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
 
-Refer to Table 3-8. 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 cheese along the horizontal axis, then

Accepted Answer

A)   the slope of England's production possibilities frontier would be ­0.67 and the slope of Spain's production possibilities frontier would be -0.5.
B)   the slope of England's production possibilities frontier would be ­1.5 and the slope of Spain's production possibilities frontier would be -2.
C)   the slope of England's production possibilities frontier would be ­.75 and the slope of Spain's production possibilities frontier would be -1.
D)   the slope of England's production possibilities frontier would be ­2 and the slope of Spain's production possibilities frontier would be -.5.E) B) and C)
F) None of the above

Question 3

Figure 3-1
Panel a)  Panel b)  
-Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Accepted Answer

A)   Panel a) .
B)   Panel b) .
C)   both Panel a)  and Panel b) .
D)   neither Panel a)  nor Panel b) .E) A) and B)
F) A) and C)

Question 4

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. 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 D)
F) C) and D)

Question 5

Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
 
-Refer to Table 3-25. Maya has an absolute advantage in the production of

Accepted Answer

A)   both goods and a comparative advantage in the production of mixers.
B)   both goods and a comparative advantage in the production of toasters.
C)   neither good and a comparative advantage in the production of mixers.
D)   neither good and a comparative advantage in the production of toasters.E) B) and D)
F) B) and C)

Question 6

Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Dewey's opportunity cost of producing one bushel of corn is 1/2 yard of cloth.

Accepted Answer

A) True 
 B)False

Question 7

Table 3-22
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-22. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to

Accepted Answer

A)   0 hairbrushes.
B)   5/6 hairbrushes.
C)   6/5 hairbrushes.
D)   Zimbabwe and Portugal can always gain from trade regardless of their opportunity costs.E) None of the above
F) A) and B)

Question 8

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier 
-Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

Accepted Answer

The answer of Figure 3-26
Mary's Production Possibilities Frontier Kate's Production...

Question 9

For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Accepted Answer

A) True 
 B)False

Question 10

A production possibilities frontier is a straight line when

Accepted Answer

A)   the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good.
B)   an economy is interdependent and engaged in trade instead of self-sufficient.
C)   the rate of tradeoff between the two goods being produced is constant.
D)   the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.E) C) and D)
F) A) and D)

Question 11

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 Korea decides to increase its production of cars by 18. What is the opportunity cost of this decision?

Accepted Answer

A)   3 airplanes
B)   6 airplanes
C)   16 airplanes
D)   150 airplanesE) None of the above
F) B) and C)

Question 12

Table 3-34
Assume that Indonesia and India can switch between producing rice and bananas at a constant rate.
 
-Refer to Table 3-34. India's opportunity cost of producing rice is

Accepted Answer

A)   1/2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice.
B)   1/2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.
C)   2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice.
D)   2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.E) None of the above
F) B) and D)

Question 13

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. If the production possibilities frontier shown is for 240 hours of production, then how long does it take Bonovia to make one pound of cheese?

Accepted Answer

A)   3/5 hour
B)   3/4 hour
C)   4/3 hours
D)   5/3 hoursE) All of the above
F) B) and C)

Question 14

Table 3-23
Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate.
 
-Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of pork for 2 pounds of tomatoes, then

Accepted Answer

A)   the farmer and the rancher will both gain from this trade.
B)   the farmer will gain from this trade, but the rancher will not.
C)   the rancher will gain from this trade, but the farmer will not.
D)   neither the farmer nor the rancher will gain from this trade.E) A) and B)
F) All of the above

Question 15

Table 3-27
Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate.
 
-Refer to Table 3-27. Min has an absolute advantage in the production of

Accepted Answer

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

Question 16

Figure 3-14
Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier
 
-Refer to Figure 3-14. Arturo has an absolute advantage in the production of

Accepted Answer

A)   burritos and a comparative advantage in the production of tacos.
B)   burritos and a comparative advantage in the production of burritos.
C)   neither good and a comparative advantage in the production of tacos.
D)   neither good and a comparative advantage in the production of burritos.E) A) and D)
F) A) and C)

Question 17

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Accepted Answer

A)   Ken has an absolute advantage in chairs.
B)   Ken has a comparative advantage in tables.
C)   Traci has an absolute advantage in chairs.
D)   Traci has a comparative advantage in chairs.E) B) and C)
F) A) and D)

Question 18

Which of the following is not a reason people choose to depend on others for goods and services?

Accepted Answer

A)   to improve their lives
B)   to allow them to enjoy a greater variety of goods and services
C)   to consume more of each good without working any more hours
D)   to allow people to produce outside their production possibilities frontiersE) A) and B)
F) All of the above

Question 19

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Accepted Answer

Absolute advantage refers to productivit...

Question 20

Figure 3-20
Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier 
-Refer to Figure 3-20. At which of the following prices would both Canada and Mexico gain from trade with each other?

Accepted Answer

A)   9 units of Good Y for 6 units of Good X
B)   8 units of Good Y for 20 units of Good X
C)   70 units of Good Y for 30 units of Good X
D)   Canada and Mexico could not both gain from trade with each other at any price.E) B) and C)
F) A) and D)

Exam 3: Interdependence and the Gains From Trade

Which of the following is not a reason people choose to depend on others for goods and services?

Correct Answer
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Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. At which of the following prices would both Canada and Mexico gain from trade with each other?

Correct Answer
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Opportunity cost refers to how many inputs a producer requires to produce a good.

Correct Answer
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Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-34. India's opportunity cost of producing rice is

Correct Answer
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Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Dewey's opportunity cost of producing one bushel of corn is 1/2 yard of cloth.

Correct Answer
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Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-27. Min has an absolute advantage in the production of

Correct Answer
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Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Correct Answer
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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 Korea decides to increase its production of cars by 18. What is the opportunity cost of this decision?

Correct Answer
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Figure 3-1 Panel a) Panel b) -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Correct Answer
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Correct Answer
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For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Correct Answer
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Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. Maya has an absolute advantage in the production of

Correct Answer
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Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to

Correct Answer
verified

Correct Answer
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Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Correct Answer
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Absolute advantage refers to productivit...
View Answer

A production possibilities frontier is a straight line when

Correct Answer
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Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Arturo has an absolute advantage in the production of

Correct Answer
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Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

Correct Answer
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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. England has a comparative advantage in the production of

Correct Answer
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Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Which of the following is not a reason people choose to depend on others for goods and services?

Correct AnswerverifiedShow Answer

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. At which of the following prices would both Canada and Mexico gain from trade with each other?

Correct AnswerverifiedShow Answer

Opportunity cost refers to how many inputs a producer requires to produce a good.

Correct AnswerverifiedShow Answer

Table 3-34 Assume that Indonesia and India can switch between producing rice and bananas at a constant rate. -Refer to Table 3-34. India's opportunity cost of producing rice is

Correct AnswerverifiedShow Answer

Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Dewey's opportunity cost of producing one bushel of corn is 1/2 yard of cloth.

Correct AnswerverifiedShow Answer

Table 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-27. Min has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Correct AnswerverifiedShow Answer

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 Korea decides to increase its production of cars by 18. What is the opportunity cost of this decision?

Correct AnswerverifiedShow Answer

Figure 3-1 Panel a) Panel b) -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Correct AnswerverifiedShow Answer

Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. -Refer to Table 3-25. Maya has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Correct AnswerverifiedAbsolute advantage refers to productivit...View AnswerShow Answer

A production possibilities frontier is a straight line when

Correct AnswerverifiedShow Answer

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Arturo has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. What is Kate's opportunity cost of one cookie?

Correct AnswerverifiedShow Answer

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. England has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Absolute advantage refers to productivit...
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