Exam 3: Interdependence and the Gains From Trade

Frank can make 20 hot dogs an hour or 10 pints of potato salad an hour. Earnest can make 30 hot dogs an hour or 20 pints of potato salad an hour. Who has the comparative advantage making hot dogs and who has the comparative advantage making potato salad?

Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if

Table 3-31 ​ -Refer to Table 3-31. For the farmer, 12.8 pounds of

Table 3-29 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 3-29. Juanita has an absolute advantage in

A production possibilities frontier is bowed outward when

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. Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision?

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Which of the following is not correct?

Figure 3-12 Argentina's Production Possibilities Frontier Peru's Production Possibilities Frontier -Suppose that Venezuela produces beef and oil and it can switch production between each at a constant rate. If the most beef it can produce is 300 million pounds and the most oil it can produce is 50 million barrels, then what is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil?

Table 3-7 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. ​ -Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan. Which of the following combinations of bolts and nails could Uzbekistan then consume, assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?

For international trade to benefit a country, it must benefit all citizens of that country.

Table 3-23 Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. ​ -Refer to Table 3-23. The rancher has a comparative advantage in the production of

Table 3-25 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. ​ -Refer to Table 3-25. At which of the following prices would both Maya and Miguel gain from trade with each other?

Table 3-30 Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate. -Refer to Table 3-30. Falda has an absolute advantage in the production of

Figure 3-22 Alice and Betty's Production Possibilities in one 8-hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. What are Alice and Betty's opportunity costs of 1 pizza?

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. 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. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of

Table 3-37 ​ -​Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah has an absolute advantage in

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20. Canada's opportunity cost of one unit of Good X is