Exam 3: Interdependence and the Gains From Trade

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. Sylvania will now be able to consume a maximum of

Figure 3-24 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-24. Betty has

If a country has the comparative advantage in producing a product, then that country must also have the absolute advantage in producing that product.

Table 3-36 -Refer to Table 3-36. What is Barbuda's opportunity cost of one umbrella?

By definition, imports are

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 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has an absolute advantage in the production of

Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of these pairs of points could be on Brazil's production possibilities frontier?

Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. Brad has an absolute advantage in the production of

Table 3-41 ​ ​ -Refer to Table 3-41. What is Russia's opportunity cost of one compass?

A production possibilities frontier is a straight line when

Scenario 3-2 In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli. In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli. -Refer to Scenario 3-2. Which country, if either, has an absolute advantage producing broccoli? Defend your answer.

Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other?

Total output in an economy increases when each person specializes because

Mark can produce 24 footballs or 48 basketballs in 8 hours. Maria can produce 64 basketballs in 8 hours. In order for Maria to have a comparative advantage producing basketballs, the number of footballs she can produce in 8 hours has to be less than _____.

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. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision?

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18. The opportunity cost of 1 bowl for Juba is

Table 3-36 -Refer to Table 3-36. If Antigua and Barbuda decide to trade with each other, Antigua should specialize in the production of

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Table 3-12 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 3-12. Which of the following points would not be on Jim's production possibilities frontier, based on a 40-hour week?