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Exam 3: Interdependence and the Gains From Trade

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Question 121

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Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes.Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes.Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.

A) True
B) False

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Question 122

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Specialization and trade are closely linked to

A) absolute advantage.
B) comparative advantage.
C) gains to some traders that exactly offset losses to other traders.
D) shrinkage of the economic pie.

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

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Question 123

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It is possible for the U.S.to gain from trade with Germany even if it takes U.S.workers fewer hours to produce every good than it takes German workers.

Scenario 3-1.Ice cream and cake. The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time. -Refer to Scenario 3-1.What is Catherine's opportunity cost of producing ice cream? Explain how you derived your answer.

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.Assume that Japan and Korea each has 2400 hours available.If each country divides its time equally between the production of cars and airplanes,then total production is

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.In the nation of Cropitia,the opportunity cost of a pound of cheese is 1.5 pounds of ham.Based on this information,if Bonovia and Cropitia want to trade,Bonovia should specialize in the production of

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year,and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year.There are 10 workers in each country.Political pressure from the fish lobby in Farmland and from the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland.As a result,Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year.If the political pressure were overcome and trade were to occur,each country would completely specialize in the product in which it has a comparative advantage.If trade were to occur,the combined output of the two countries would increase by

Table 3-10 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 3-10.Juanita has an absolute advantage in

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?

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.Andia has a comparative advantage in the production of

Table 3-12 -Refer to Table 3-1.For the farmer,the opportunity cost of 15 pounds of meat is

Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier -Refer to Figure 3-5.If the production possibilities frontier shown for Merve is for 8 hours of work,then how long does it take Merve to make one purse?

An assumption of the production possibilities frontier model is that technology is fixed.

Figure 3-9 Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier -Refer to Figure 3-9.Uzbekistan should specialize in the production of

Table 3-11 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-11.Falda has a comparative advantage in the production of

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

Figure 3-9 Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier -Refer to Figure 3-9.If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails,then

Figure 3-2 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. -Alexis is a lawyer.She bills her clients $100 an hour for her services.She can also mow her lawn in 30 minutes.She can hire someone to mow her lawn who takes an hour.Of the following prices,which is the highest Alexis would pay someone to mow her lawn?

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.Which of the following points would be on Min's production possibilities frontier,based on a 36-hour production period?

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.The opportunity cost of 1 parasol for Huang is