Question 1

Which of the following statements about comparative advantage is not true?

Accepted Answer

A)  Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.
B)  The principle of comparative advantage applies to countries as well as to individuals.
C)  Economists use the principle of comparative advantage to emphasize the potential benefits of free trade.
D)  A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.E) A) and B)
F) All of the above

Question 2

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. England has an absolute advantage in the production of

Accepted Answer

A)  cheese and Spain has an absolute advantage in the production of bread.
B)  bread and Spain has an absolute advantage in the production of cheese.
C)  both goods and Spain has an absolute advantage in the production of neither good.
D)  neither good and Spain has an absolute advantage in the production of both goods.E) None of the above
F) All of the above

Question 3

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

Accepted Answer

A)  Belarus should export linen to Russia.
B)  Russia should export linen to Belarus.
C)  trading linen would provide no net advantage to either country.
D)  Without additional information about opportunity costs, this question cannot be answered.E) A) and C)
F) All of the above

Question 4

Table 3-18
Chris and Tony's Production Opportunities
   Tomatores  Patta Sauce  Chris 10lbs 300 jars  Tony 14lbs280jars\begin{array} { | l | c | c | } \hline & 	ext { Tomatores } & 	ext { Patta Sauce } \\hline 	ext { Chris } & 10 \mathrm { lbs } & 	ext { 300 jars } \\hline 	ext { Tony } & 14 \mathrm { lbs } & 280 \mathrm { jars } \\hline\end{array} Chris  Tony ​ Tomatores 10lbs14lbs​ Patta Sauce  300 jars 280jars​​ 
-Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. If Chris and Tony both decide to specialize and produce only the good in which they have a comparative advantage, then

Accepted Answer

A)  Chris will produce only sauce and Tony will produce only tomatoes.
B)  Chris will produce only tomatoes and Tony will produce only sauce.
C)  Both Chris and Tony will produce only sauce.
D)  Both Chris and Tony will produce only tomatoes. E) A) and B)
F) A) and C)

Question 5

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 Min is

Accepted Answer

A)  1/3 plate.
B)  1/2 plate.
C)  2 plates.
D)  3 plates.E) B) and C)
F) B) and D)

Question 6

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. Assume that Falda and Varick each has 1 hour available. If each person divides his time equally between the production of wheat and cloth, then total production is

Accepted Answer

A)  4 bushels of wheat and 7.5 yards of cloth.
B)  7 bushels of wheat and 13.5 yards of cloth.
C)  8 bushels of wheat and 15 yards of cloth.
D)  14 bushels of wheat and 27 yards of cloth.E) C) and D)
F) All of the above

Question 7

When there are two people and each is capable of producing two goods, it is possible for one person to have a comparative advantage over the other in both goods.

Accepted Answer

A) True 
 B)False

Question 8

Table 3-12
 
-Refer to Table 3-12. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Accepted Answer

A)  5 pounds of meat and 4 pounds of potatoes.
B)  6 pounds of meat and 7.5 pounds of potatoes.
C)  7.5 pounds of meat and 6 pounds of potatoes.
D)  10 pounds of meat and 8 pounds of potatoes.E) None of the above
F) B) and C)

Question 9

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?

Accepted Answer

A)  Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks.
B)  Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks.
C)  Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats.
D)  Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.E) C) and D)
F) A) and C)

Question 10

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) All of the above
F) B) and D)

Question 11

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Accepted Answer

A)  neither person faces trade-offs.
B)  the frontiers are straight lines.
C)  the frontiers are bowed out.
D)  they choose not to trade with one another.E) B) and C)
F) A) and D)

Question 12

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's opportunity cost of one yard of cloth is

Accepted Answer

A)  2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat.
B)  2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat.
C)  3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat.
D)  3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat.E) A) and B)
F) C) and D)

Question 13

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. Which of the following combinations of mixers and toasters could Maya produce in 40 hours?

Accepted Answer

A)  1 mixers and 7 toasters.
B)  2 mixers and 5 toasters.
C)  2.5 mixers and 4 toasters.
D)  3 mixers and 4 toasters.E) B) and C)
F) A) and B)

Question 14

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. What is Andia's opportunity cost of producing one pound of beef?

Accepted Answer

A)  3/5 bushel of wheat
B)  6/5 bushels of wheat
C)  4/3 bushels of wheat
D)  5/3 bushels of wheatE) All of the above
F) None of the above

Question 15

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 16

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

Accepted Answer

A)  wheat and Zardia has a comparative advantage in the production of beef.
B)  beef and Zardia has a comparative advantage in the production of wheat.
C)  both goods and Zardia has a comparative advantage in the production of neither good.
D)  neither good and Zardia has a comparative advantage in the production of both goods.E) None of the above
F) B) and C)

Question 17

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. Without trade, Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes. As a result, Japan gained

Accepted Answer

A)  0 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
B)  2 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
C)  28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
D)  52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.E) C) and D)
F) A) and B)

Question 18

Goods produced abroad and sold domestically are called

Accepted Answer

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

Question 19

Figure 3-8
 
-Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

Accepted Answer

A)  12 pounds of coffee and 12 pounds of soybeans.
B)  14 pounds of coffee and 9 pounds of soybeans.
C)  16 pounds of coffee and 6 pounds of soybeans.
D)  28 pounds of coffee and 18 pounds of soybeans.E) A) and D)
F) A) and C)

Question 20

Specialization and trade are closely linked to

Accepted Answer

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 C)
F) C) and D)

Exam 3: Interdependence and the Gains From Trade

Specialization and trade are closely linked to

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Goods produced abroad and sold domestically are called

Correct Answer
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Table 3-12 -Refer to Table 3-12. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Correct Answer
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Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

Correct Answer
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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. England has an absolute advantage in the production of

Correct Answer
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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
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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 Min is

Correct Answer
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Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Correct Answer
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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. What is Andia's opportunity cost of producing one pound of beef?

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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's opportunity cost of one yard of cloth is

Correct Answer
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Which of the following statements about comparative advantage is not true?

Correct Answer
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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

Correct Answer
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Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?

Correct Answer
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When there are two people and each is capable of producing two goods, it is possible for one person to have a comparative advantage over the other in both goods.

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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. Which of the following combinations of mixers and toasters could Maya produce in 40 hours?

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Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

Correct Answer
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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. Assume that Falda and Varick each has 1 hour available. If each person divides his time equally between the production of wheat and cloth, then total production is

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The opportunity cost of an item is

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Exam 3: Interdependence and the Gains From Trade

Specialization and trade are closely linked to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods produced abroad and sold domestically are called

Correct AnswerverifiedShow Answer

Table 3-12 -Refer to Table 3-12. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is

Correct AnswerverifiedShow Answer

Figure 3-8 -Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

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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. England has an absolute advantage in the production of

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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.

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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 Min is

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Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

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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. What is Andia's opportunity cost of producing one pound of beef?

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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's opportunity cost of one yard of cloth is

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Which of the following statements about comparative advantage is not true?

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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

Correct AnswerverifiedShow Answer

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?

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When there are two people and each is capable of producing two goods, it is possible for one person to have a comparative advantage over the other in both goods.

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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. Which of the following combinations of mixers and toasters could Maya produce in 40 hours?

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Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

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Correct AnswerverifiedShow Answer

The opportunity cost of an item is

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Correct AnswerverifiedShow Answer

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