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Exam 3: Interdependence and the Gains From Trade

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Question 261

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Which of the following statements is not correct?

A) Trade allows for specialization.
B) Trade has the potential to benefit all nations.
C) Trade allows nations to consume outside of their production possibilities curves.
D) Absolute advantage is the driving force of specialization.

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

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Question 262

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The gains from specialization and trade are based on ______ advantage.

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Question 263

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Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If Bryce must work 4 months to produce each sweater, then his production possibilities frontier is based on how many months of work?

Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of production, then which of the following combinations of sweaters and jackets could Lisa and Bryce together not produce in a given year?

Figure 3-4 Lisa's Production Possibilities Frontier Bryce's Production Possibilities Frontier -Refer to Figure 3-4. If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket?

Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. -Refer to Table 3-21. Jamaica should specialize in the production of

Table 3-33 Chris and Tony's Production Opportunities -Refer to Table 3-33 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. Which of the following statements is correct?

Table 3-37 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-37. Aruba should export

Figure 3-3 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -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?

Table 3-31 ​ -Refer to Table 3-31. For the rancher, the opportunity cost of 1 pound of meat is

Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

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

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. The number of minutes needed by Juanita to program a cellular phone is

Opportunity cost measures the trade-off between two goods that each producer faces.

Economists use the term ______ to refer to the ability to produce a good using fewer inputs than another producer.

Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides. a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides?

Figure 3-7 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-7. If Bintu and Juba both spend all of their time making bowls, then total production is

​Table 3-38 -​Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From the table we know that Nebraska has a

Trade can only benefit a nation if that nation has an absolute advantage in the production of that good. ​

​A country can have a comparative advantage in the production of a good, even if it does not have an absolute advantage in the production of that good.