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Exam 3: Interdependence and the Gains From Trade

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Question 231

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Use the following Figure to answer the question : Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. At which of the following prices would both Chile and Colombia gain from trade with each other?

A) 6 pounds of soybeans for 9 pounds of coffee
B) 8 pounds of soybeans for 20 pounds of coffee
C) 11 pounds of soybeans for 33 pounds of coffee
D) Chile and Colombia could not both gain from trade with each other at any price.

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

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Question 232

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Use the following Table to answer the question : Table 3-37 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-37. Aruba 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) A) and B)
F) A) and C)

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Question 233

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If the U.S. could produce 5 televisions per hour of labor and China could produce 3 televisions per hour of labor, would it necessarily follow that the U.S. should specialize in television production? Explain your answer using the concepts of comparative and or absolute advantage.

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, a mutually advantageous trade can be struck at a price of one apple pie for 1/3 gallon of ice cream.

Use the following Figure to answer the question : Figure 3-3 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-3. If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

Use the following Table to answer the question : Table 3-10 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-10. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring cars along the horizontal axis, then

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Use the following scenario to answer the question : Scenario 3-2 In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli. In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli. -Refer to Scenario 3-2. Which country, if either, has an absolute advantage producing broccoli? Defend your answer.

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

Use the following Table to answer the question : 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. Jamaica has a comparative advantage in the production of

Use the following scenario to answer the question : Scenario 3-1 The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. Greg's Production Possibilities Catherine's Production Possibilities -Refer to Scenario 3-1. Which if any goods) does Catherine have an absolute advantage producing?

Use the following Table to answer the question : Table 3-41 -Refer to Table 3-41. What is Russia's opportunity cost of one radio?

Use the following Table to answer the question : 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. Which of the following combinations of cheese and bread could England not produce in 24 hours?

Use the following Table to answer the question : 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

Use the following Table to answer the question : Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. -Refer to Table 3-28. Jim has an absolute advantage in

Use the following Table to answer the question : 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. Jamaica and Norway would not be able to gain from trade if Norway's opportunity cost of one radio changed to

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

Use the following Table to answer the question : 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. Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision?

Use the following Figure to answer the question :Figure 3-10 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. If point A represents Alice's production and point B represents Betty's production,

Use the following Figure to answer the question : Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to