Question 1

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

Accepted Answer

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

Question 2

As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne's production possibilities frontier is a straight line if

Accepted Answer

A)  she faces no trade-off between writing term papers and completing homework assignments.
B)  she can switch between writing term papers and completing homework assignments at a constant rate.
C)  the rate at which she can switch between homework assignments and term papers depends on the number of homework assignments she is completing and on the number of term papers she is writing.
D)  she is required by her professors to spend half of her time on term papers and the other half of her time on homework assignments.E) A) and B)
F) A) and C)

Question 3

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

Accepted Answer

A)  wheat.
B)  cloth.
C)  both goods.
D)  neither good.E) B) and D)
F) A) and B)

Question 4

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

Accepted Answer

A)  0.36 bushel of corn.
B)  2.8 bushels of corn.
C)  14 bushels of corn.
D)  70 bushels of corn.E) A) and B)
F) A) and C)

Question 5

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. Barb has an absolute advantage in

Accepted Answer

A)  both setting up and testing computers and a comparative advantage in setting up computers.
B)  both setting up and testing computers and a comparative advantage in testing computers.
C)  neither setting up nor testing computers and a comparative advantage in setting up computers.
D)  neither setting up nor testing computers and a comparative advantage in testing computers.E) B) and D)
F) C) and D)

Question 6

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. Zimbabwe's opportunity cost of one hairbrush is

Accepted Answer

A)  3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush.
B)  3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.
C)  10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush.
D)  10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.E) None of the above
F) B) and C)

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

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. For many years the two countries traded, each completely specializing according to their respective comparative advantages. Now, however, war has broken out between them and all trade has stopped. 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. The war has caused the combined yearly output of the two countries to decline by

Accepted Answer

A)  10 units of corn and 10 units of wheat.
B)  20 units of corn and 20 units of wheat.
C)  30 units of corn and 30 units of wheat.
D)  40 units of corn and 40 units of wheat.E) A) and B)
F) A) and C)

Question 9

Comparative advantage is related most closely to which of the following?

Accepted Answer

A)  output per hour
B)  opportunity cost
C)  efficiency
D)  bargaining strength in international tradeE) B) and C)
F) A) and C)

Question 10

Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost.

Accepted Answer

A) True 
 B)False

Question 11

Figure 3-10

-Refer to Figure 3-10. Both Alice and Betty

Accepted Answer

A)  face a constant trade-off between producing pitchers of lemonade and pizzas.
B)  can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production.
C)  would benefit from specializing in lemonade production.
D)  would benefit from specializing in pizza production.E) A) and B)
F) A) and C)

Question 12

Figure 3-3
   
-Refer to Figure 3-3. Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo. Which of the following combinations of tacos and burritos could Dina then consume, assuming Dina specializes in taco production and Arturo specializes in burrito production?

Accepted Answer

A)  100 tacos and 200 burritos
B)  200 tacos and 130 burritos
C)  300 tacos and 60 burritos
D)  340 tacos and 40 burritosE) None of the above
F) A) and B)

Question 13

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 should specialize in the production of

Accepted Answer

A)  wheat and Zardia should specialize in the production of beef.
B)  beef and Zardia should specialize in the production of wheat.
C)  both goods and Zardia should specialize in the production of neither good.
D)  neither good and Zardia should specialize in the production of both goods.E) B) and D)
F) None of the above

Question 14

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

Accepted Answer

A)  the country should import that good.
B)  the country should produce just enough of that good for its own consumption.
C)  the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good.
D)  None of the above is correct.E) A) and C)
F) B) and C)

Question 15

Figure 3-9
   
-Refer to Figure 3-9. Without trade, Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails. As a result, Uzbekistan gained

Accepted Answer

A)  2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails.
B)  4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails.
C)  14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails.
D)  16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails.E) B) and D)
F) A) and C)

Question 16

When two countries trade with one another, it is most likely because

Accepted Answer

A)  the wealthy people in each of the two countries are able to benefit, through trade, by taking advantage of other people who are poor.
B)  some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade.
C)  the opportunity costs of producing various goods are identical for the two countries.
D)  the two countries wish to take advantage of the principle of comparative advantage.E) C) and D)
F) A) and C)

Question 17

Opportunity cost refers to how many inputs a producer requires to produce a good.

Accepted Answer

A) True 
 B)False

Question 18

Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless

Accepted Answer

A)  Brady has an absolute advantage over everyone else in mowing his lawn.
B)  Brady has a comparative advantage over everyone else in mowing his lawn.
C)  Brady's opportunity cost of mowing his lawn is higher than it is for everyone else.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 19

If Shawn can produce donuts at a lower opportunity cost than Sue, then

Accepted Answer

A)  Shawn has a comparative advantage in the production of donuts.
B)  Sue has a comparative advantage in the production of donuts.
C)  Shawn should not produce donuts.
D)  Shawn is capable of producing more donuts than Sue in a given amount of time.E) A) and B)
F) None of the above

Question 20

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Accepted Answer

A)  falls.
B)  stays the same.
C)  rises.
D)  may fall, rise, or stay the same.E) A) and B)
F) A) and D)

Exam 3: Interdependence and the Gains From Trade

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

Correct Answer
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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 should specialize in the production of

Correct Answer
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Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

Correct Answer
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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.

Correct Answer
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Correct Answer
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Comparative advantage is related most closely to which of the following?

Correct Answer
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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. Barb has an absolute advantage in

Correct Answer
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When two countries trade with one another, it is most likely because

Correct Answer
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When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Correct Answer
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Correct Answer
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Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless

Correct Answer
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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. Zimbabwe's opportunity cost of one hairbrush is

Correct Answer
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Opportunity cost refers to how many inputs a producer requires to produce a good.

Correct Answer
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Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost.

Correct Answer
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Figure 3-10 -Refer to Figure 3-10. Both Alice and Betty

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. Falda has a comparative advantage in the production of

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

Correct Answer
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If Shawn can produce donuts at a lower opportunity cost than Sue, then

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 should specialize in the production of

Correct AnswerverifiedShow Answer

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Comparative advantage is related most closely to which of the following?

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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. Barb has an absolute advantage in

Correct AnswerverifiedShow Answer

When two countries trade with one another, it is most likely because

Correct AnswerverifiedShow Answer

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless

Correct AnswerverifiedShow Answer

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. Zimbabwe's opportunity cost of one hairbrush is

Correct AnswerverifiedShow Answer

Opportunity cost refers to how many inputs a producer requires to produce a good.

Correct AnswerverifiedShow Answer

Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost.

Correct AnswerverifiedShow Answer

Figure 3-10 -Refer to Figure 3-10. Both Alice and Betty

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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 has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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If Shawn can produce donuts at a lower opportunity cost than Sue, then

Correct AnswerverifiedShow Answer

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