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Exam 3: Interdependence and the Gains From Trade

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Question 111

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Figure 3-9 -Refer to Figure 3-9. Uzbekistan should specialize in the production of

A) bolts and import nails.
B) nails and import bolts.
C) both goods and import neither good.
D) neither good and import both goods.

E) C) and D)
F) None of the above

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Question 112

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Table 3-9 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 3-9. Which of the following points would not be on Jim's production possibilities frontier, based on a 40-hour week?

A) (0 computers set up, 60 computers tested)
B) (40 computers set up, 30 computers tested)
C) (60 computers set up, 12 computers tested)
D) (72 computers set up, 6 computers tested)

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

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Question 113

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Figure 3-10 -Refer to Figure 3-10. If Alice produces only lemonade, she can produce

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.

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?

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. Maya has an absolute advantage in the production of

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5. At which of the following prices would both England and Spain gain from trade with each other?

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 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

Table 3-12 -Refer to Table 3-1. Relative to the rancher, the farmer has a comparative advantage in the production of

Assume for Namibia that the opportunity cost of each hut is 200 bowls. Which of these pairs of points could be on Namibia's production possibilities frontier?

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 plate for Min is

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

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

Differences in opportunity cost allow for gains from trade.

For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two opportunity costs.

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 not be on Huang's production possibilities frontier, based on a 36-hour production period?

Figure 3-1 -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches depends on how many chairs and couches are being produced in

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?

Figure 3-7 -Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls and making cups, then total production is