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Exam 3: Interdependence and the Gains From Trade

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Question 101

True/False

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

A) True
B) False

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Question 102

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Table 3-39 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. ​ ​ ​ -Refer to Table 3-39. Korea should specialize in the production of

A) cars and import airplanes.
B) airplanes and import cars.
C) both goods and import neither good.
D) neither good and import both goods.

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

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Question 103

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Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If Lisa and Bryce both spend all of their time producing jackets, then total production is

Adam Smith asserted that a person should never attempt to make at home

Figure 3-12 Argentina's Production Possibilities Frontier Peru's Production Possibilities Frontier -Charlotte can produce pork and beans and can switch between producing them at a constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce a pound of beans, what is her opportunity cost of pork and what is her opportunity cost of beans?

Table 3-41 ​ ​ -Refer to Table 3-41. If the two countries specialize and trade with each other, which country will import radios?

When describing the opportunity cost of two producers, economists use the term

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

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.

Interdependence among individuals and interdependence among nations are both based on the gains from trade.

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems, then

Table 3-13 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 3-13. Which of the following points would be on Shantala's production possibilities frontier, based on a 40-hour week?

Figure 3-23 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 3-23. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by

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

Which of the following statements is not correct?

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. The opportunity cost of 1 poem for Perry is

​When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. Bintu has an absolute advantage in the production of

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by

When a country has a comparative advantage in producing a certain good,