Question 1

To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Accepted Answer

A) True 
 B)False

Question 2

Figure 3-15
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier 
-Refer to Figure 3-15. Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production?

Accepted Answer

A)   1 novel and 14 poems
B)   2 novels and 8 poems
C)   3 novels and 6 poems
D)   4 novels and 2 poemsE) B) and D)
F) None of the above

Question 3

Table 3-29
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. 
-Refer to Table 3-29. Juanita's opportunity cost of programming one cellular phone is testing

Accepted Answer

A)   7.5 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 5/2 cellular phones.
B)   2/15 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 5/2 cellular phones.
C)   7.5 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 2/5 cellular phones.
D)   2/15 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 2/5 cellular phones.E) None of the above
F) B) and C)

Question 4

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 Alice produces only lemonade, she can produce

Accepted Answer

A)   200 pitchers per day.
B)   300 pitchers per day.
C)   400 pitchers per day.
D)   450 pitchers per day.E) B) and C)
F) A) and D)

Question 5

Trade between countries

Accepted Answer

A)   allows each country to consume at a point outside its production possibilities frontier.
B)   limits a country's ability to produce goods and services on its own.
C)   must benefit both countries equally; otherwise, trade is not mutually beneficial.
D)   can best be understood by examining the countries' absolute advantages.E) A) and C)
F) B) and D)

Question 6

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 which of the following combinations of ham and cheese could Bonovia produce in 240 hours?

Accepted Answer

A)   225 pounds of ham and 140 pounds of cheese
B)   280 pounds of ham and 100 pounds of cheese
C)   355 pounds of ham and 80 pounds of cheese
D)   330 pounds of ham and 60 pounds of cheeseE) B) and D)
F) None of the above

Question 7

Table 3-38
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. 
-Refer to Table 3-38. Spain should export

Accepted Answer

A)   cheese and import bread.
B)   bread and import cheese.
C)   both goods and import neither good.
D)   neither good and import both goods.E) C) and D)
F) B) and D)

Question 8

Table 3-18
The following table contains some production possibilities for an economy for a given month. 
-Refer to Table 3-18. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)   150.
B)   225.
C)   300.
D)   375.E) None of the above
F) All of the above

Question 9

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 Spain produce in 24 hours?

Accepted Answer

A)   4 units of cheese and 3 units of bread.
B)   6 units of cheese and 1 units of bread.
C)   7 units of cheese and 1.5 units of bread.
D)   3 units of cheese and 3 units of bread.E) A) and D)
F) All of the above

Question 10

Table 3-36 
-Refer to Table 3-36. What is Barbuda's opportunity cost of one towel?

Accepted Answer

A)   3/5 umbrellas
B)   2/3 umbrellas
C)   3/2 umbrellas
D)   5/3 umbrellasE) B) and C)
F) A) and D)

Question 11

Goods produced abroad and sold domestically are called

Accepted Answer

A)   exports.
B)   imports.
C)   exchange rates.
D)   opportunity costs.E) A) and C)
F) All of the above

Question 12

An economy's production possibilities frontier is also its consumption possibilities frontier

Accepted Answer

A)   under all circumstances.
B)   under no circumstances.
C)   when the economy is self-sufficient.
D)   when the rate of tradeoff between the two goods being produced is constant.E) A) and C)
F) B) and C)

Question 13

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 14

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

Question 15

Figure 3-22
Alice and Betty's Production Possibilities in one 8­hour day.
Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier 
-Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Accepted Answer

A)   Alice's opportunity cost of 1 pitcher of lemonade is 1/2 of a pizza and Betty's opportunity cost of 1 pitcher of lemonade is 2/3 of a pizza.
B)   Alice's opportunity cost of 1 pitcher of lemonade is 2 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 1.5 pizzas.
C)   Alice's opportunity cost of 1 pitcher of lemonade is 10 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 10 pizzas.
D)   Alice's opportunity cost of 1 pitcher of lemonade is 200 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 300 pizzas.E) B) and C)
F) All of the above

Question 16

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. Huang has an absolute advantage in the production of

Accepted Answer

A)   parasols and a comparative advantage in the production of parasols.
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) A) and B)
F) B) and C)

Question 17

The opportunity cost of an item is

Accepted Answer

A)   the number of hours that one must work in order to buy one unit of the item.
B)   what you give up to get that item.
C)   always less than the dollar value of the item.
D)   always greater than the cost of producing the item.E) A) and D)
F) A) and C)

Question 18

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 19

Figure 3-16
Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier 
-Refer to Figure 3-16. Merve should specialize in the production of

Accepted Answer

A)   purses.
B)   wallets.
C)   both goods.
D)   neither good.E) A) and B)
F) A) and C)

Question 20

Figure 3-2
Brazil's Production Possibilities Frontier 
-Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Accepted Answer

A)   for Brazil, it is more costly to produce peanuts than it is to produce cashews.
B)   Brazil will produce more peanuts and fewer cashews as time goes by.
C)   Brazil faces a tradeoff between producing peanuts and producing cashews.
D)   Brazil should specialize in producing cashews.E) A) and C)
F) A) and B)

Exam 3: Interdependence and the Gains From Trade

Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Correct Answer
verified

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 Spain produce in 24 hours?

Correct Answer
verified

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 Alice produces only lemonade, she can produce

Correct Answer
verified

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
verified

An economy's production possibilities frontier is also its consumption possibilities frontier

Correct Answer
verified

Figure 3-22 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Correct Answer
verified

Correct Answer
verified

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

Correct Answer
verified

Trade between countries

Correct Answer
verified

The opportunity cost of an item is

Correct Answer
verified

Table 3-36 -Refer to Table 3-36. What is Barbuda's opportunity cost of one towel?

Correct Answer
verified

Correct Answer
verified

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. Huang has an absolute advantage in the production of

Correct Answer
verified

Table 3-18 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-18. If the production possibilities frontier is bowed outward, then "?" could be

Correct Answer
verified

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Merve should specialize in the production of

Correct Answer
verified

Goods produced abroad and sold domestically are called

Correct Answer
verified

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
verified

Correct Answer
verified

Table 3-38 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-38. Spain should export

Correct Answer
verified

To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

Figure 3-2 Brazil's Production Possibilities Frontier -Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Correct AnswerverifiedShow Answer

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 Spain produce in 24 hours?

Correct AnswerverifiedShow Answer

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 Alice produces only lemonade, she can produce

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

An economy's production possibilities frontier is also its consumption possibilities frontier

Correct AnswerverifiedShow Answer

Figure 3-22 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier.

Correct AnswerverifiedShow Answer

Trade between countries

Correct AnswerverifiedShow Answer

The opportunity cost of an item is

Correct AnswerverifiedShow Answer

Table 3-36 -Refer to Table 3-36. What is Barbuda's opportunity cost of one towel?

Correct AnswerverifiedShow Answer

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. Huang has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Table 3-18 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-18. If the production possibilities frontier is bowed outward, then "?" could be

Correct AnswerverifiedShow Answer

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Merve should specialize in the production of

Correct AnswerverifiedShow Answer

Goods produced abroad and sold domestically are called

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

Correct AnswerverifiedShow Answer

Table 3-38 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-38. Spain should export

Correct AnswerverifiedShow Answer

To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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 Alice produces only lemonade, she can produce

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 3-22 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified