Question 1

Figure 3-6
   
-Refer to Figure 3-6. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision?

Accepted Answer

A)   2/5 pie
B)   2 pies
C)   5/2 pies
D)   10 piesE) A) and B)
F) All of the above

Question 2

Figure 3-4
   
-Refer to Figure 3-4. Perry should specialize in the production of

Accepted Answer

A)   novels.
B)   poems.
C)   both goods.
D)   neither good.E) A) and B)
F) A) and C)

Question 3

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

Accepted Answer

A)   Both countries could gain from trade with each other.
B)   Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods.
C)   Neither country could gain from trade with each other because neither one has a comparative advantage.
D)   Oatland could gain from trade between the two countries, but Cornland definitively would lose.E) A) and B)
F) None of the above

Question 5

Table 3-2
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
 
-Refer to Table 3-2. Aruba's opportunity cost of one cooler is

Accepted Answer

A)   0.4 radio and Iceland's opportunity cost of one cooler is 0.25 radio.
B)   0.4 radio and Iceland's opportunity cost of one cooler is 4 radios.
C)   2.5 radios and Iceland's opportunity cost of one cooler is 0.25 radio.
D)   2.5 radios and Iceland's opportunity cost of one cooler is 4 radios.E) A) and B)
F) None of the above

Question 6

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of

Accepted Answer

A)   30 units of corn and 30 units of wheat.
B)   40 units of corn and 30 units of wheat.
C)   40 units of corn and 20 units of wheat.
D)   10 units of corn and 40 units of wheat.E) None of the above
F) B) and D)

Question 7

Figure 3-8
   
-Refer to Figure 3-8. Chile has a comparative advantage in the production of

Accepted Answer

A)   coffee and Colombia has a comparative advantage in the production of soybeans.
B)   soybeans and Colombia has a comparative advantage in the production of coffee.
C)   both goods and Colombia has a comparative advantage in the production of neither good.
D)   neither good and Colombia has a comparative advantage in the production of both goods.E) None of the above
F) A) and B)

Question 8

If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Accepted Answer

A) True 
 B)False

Question 9

Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
 
-Refer to Table 3-6. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring mixers along the horizontal axis, then

Accepted Answer

A)   the slope of Maya's production possibilities frontier would be -1.6 and the slope of Miguel's production possibilities frontier would be -2.
B)   the slope of Maya's production possibilities frontier would be -0.625 and the slope of Miguel's production possibilities frontier would be -0.5.
C)   the slope of Maya's production possibilities frontier would be 0.625 and the slope of Miguel's production possibilities frontier would be 0.5.
D)   the slope of Maya's production possibilities frontier would be 1.6 and the slope of Miguel's production possibilities frontier would be 2.E) None of the above
F) A) and B)

Question 10

If a person chooses self-sufficiency, then she can only consume what she produces.

Accepted Answer

A) True 
 B)False

Question 11

Figure 3-3
   
-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?

Accepted Answer

A)   40 hours
B)   100 hours
C)   400 hours
D)   1600 hoursE) All of the above
F) B) and C)

Question 12

Trade allows all countries to achieve greater prosperity.

Accepted Answer

A) True 
 B)False

Question 13

Figure 3-7
   
-Refer to Figure 3-7. The opportunity cost of 1 cup for Bintu is

Accepted Answer

A)   1/8 bowl.
B)   1/4 bowl.
C)   4 bowls.
D)   8 bowls.E) None of the above
F) B) and C)

Question 14

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Accepted Answer

A) True 
 B)False

Question 15

Figure 3-5
   
-Refer to Figure 3-5. Hosne's opportunity cost of one wallet is

Accepted Answer

A)   4/5 purse and Merve's opportunity cost of one wallet is 2/3 purse.
B)   4/5 purse and Merve's opportunity cost of one wallet is 3/2 purses.
C)   5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse.
D)   5/4 purses and Merve's opportunity cost of one wallet is 3/2 purses.E) None of the above
F) A) and B)

Question 16

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-3. Which of the following represents Zimbabwe's and Portugal's production possibilities frontiers when each country has 60 minutes of machine time available?

Accepted Answer

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

Question 17

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

Accepted Answer

A)   Howard is very good at knitting sweaters and at cooking tasty food, but Mai's skills in both of these activities are very poor.
B)   Howard is very good at knitting sweaters and at cooking tasty food; Mai is very good at knitting sweaters, but she knows nothing about cooking tasty food.
C)   Howard's skills in knitting sweaters are fairly good, but his skills in cooking tasty food are fairly bad; Mai's skills in knitting sweaters are fairly bad, but her skills in cooking tasty food are fairly good.
D)   Howard's skills are such that he can produce only sweaters, and Mai's skills are such that she can produce only tasty food.E) None of the above
F) B) and C)

Question 18

Figure 3-6
   
-Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Accepted Answer

A)   2 pies and 25 tarts
B)   10 pies and 22 tarts
C)   12 pies and 15 tarts
D)   15 pies and 16 tartsE) A) and B)
F) C) and D)

Question 19

Figure 3-9
   
-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 make in a given 2-day production period?

Accepted Answer

A)   12 bolts and 120 nails
B)   24 bolts and 96 nails
C)   38 bolts and 50 nails
D)   44 bolts and 24 nailsE) None of the above
F) B) and C)

Question 20

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

Exam 3: Interdependence and the Gains From Trade

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Correct Answer
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Figure 3-3 -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?

Correct Answer
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Figure 3-5 -Refer to Figure 3-5. Hosne's opportunity cost of one wallet is

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 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2. Aruba's opportunity cost of one cooler is

Correct Answer
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Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 cup for Bintu is

Correct Answer
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Figure 3-6 -Refer to Figure 3-6. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision?

Correct Answer
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Figure 3-4 -Refer to Figure 3-4. Perry should specialize in the production of

Correct Answer
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Figure 3-8 -Refer to Figure 3-8. Chile has a comparative advantage in the production of

Correct Answer
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Consider two individuals - Howard and Mai - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Howard and Mai are least obvious in which of the following cases?

Correct Answer
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Correct Answer
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Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

Correct Answer
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Correct Answer
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Figure 3-6 -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Correct Answer
verified

If a person chooses self-sufficiency, then she can only consume what she produces.

Correct Answer
verified

Trade allows all countries to achieve greater prosperity.

Correct Answer
verified

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Correct Answer
verified

If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Correct Answer
verified

Figure 3-9 -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 make in a given 2-day production period?

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Correct AnswerverifiedShow Answer

Figure 3-3 -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?

Correct AnswerverifiedShow Answer

Figure 3-5 -Refer to Figure 3-5. Hosne's opportunity cost of one wallet is

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 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2. Aruba's opportunity cost of one cooler is

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 cup for Bintu is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision?

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. Perry should specialize in the production of

Correct AnswerverifiedShow Answer

Figure 3-8 -Refer to Figure 3-8. Chile has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Correct AnswerverifiedShow Answer

If a person chooses self-sufficiency, then she can only consume what she produces.

Correct AnswerverifiedShow Answer

Trade allows all countries to achieve greater prosperity.

Correct AnswerverifiedShow Answer

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Correct AnswerverifiedShow Answer

If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Correct AnswerverifiedShow Answer

Figure 3-9 -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 make in a given 2-day production period?

Correct AnswerverifiedShow Answer

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