Exam 3: Interdependence and the Gains From Trade

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

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

Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

​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 and soybeans each state can produce in one growing season. From this table, we can conclude that Iowa should specialize in the production of

Trade between countries

Table 3-41 ​ ​ -Refer to Table 3-41. If the two countries decide to trade with each other, which country should specialize in producing compasses?

Table 3-17 The following table contains some production possibilities for an economy for a given year. -Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be

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. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is

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. The opportunity cost of 1 mixer for Miguel is

Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. If Mary and Kate trade foods with each other, who will trade away muffins in exchange for cookies?

Table 3-8 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ -Refer to Table 3-8. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring cheese along the horizontal axis, then

Adam Smith developed the theory of comparative advantage as we know it today.

Table 3-8 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ -Refer to Table 3-8. Which of the following combinations of cheese and bread could England not produce in 24 hours?

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Table 3-15 ​ ​ -Refer to Table 3-15. Which of the following combinations of meat and potatoes could the farmer produce in 40 hours?

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs.. Given this, we know that

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. Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is