Question 1

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

A) True 
 B)False

Question 2

People who provide you with goods and services

Accepted Answer

A)  are acting out of generosity. 
B)  do so because they get something in return. 
C)  have chosen not to become interdependent. 
D)  are required to do so by the government. 
A)  are acting out of generosity. 
B)  do so because they get something in return. 
C)  have chosen not to become interdependent. 
D)  are required to do so by the government.

Question 3

Figure 3-7
Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier    
-Refer to Figure 3-7.If the production possibilities frontiers shown are each for 4 hours of work,then which of the following combinations of bowls and cups could Bintu and Juba together make in a given 4-hour production period?

Accepted Answer

A)  1 bowl and 14 cups 
B)  2 bowls and 11 cups 
C)  3 bowls and 10 cups 
D)  5 bowls and 5 cups 
A)  1 bowl and 14 cups 
B)  2 bowls and 11 cups 
C)  3 bowls and 10 cups 
D)  5 bowls and 5 cups

Question 4

Figure 3-3
Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier    
-Refer to Figure 3-3.If Bob and Enid both spend all of their time producing tacos,then total production is

Accepted Answer

A)  400 tacos and 0 burritos. 
B)  400 tacos and 250 burritos. 
C)  800 tacos and 0 burritos. 
D)  800 tacos and 500 burritos. 
A)  400 tacos and 0 burritos. 
B)  400 tacos and 250 burritos. 
C)  800 tacos and 0 burritos. 
D)  800 tacos and 500 burritos.

Question 5

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 an absolute advantage in the production of

Accepted Answer

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

Question 6

Figure 3-3
Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier    
-Refer to Figure 3-3.Which of the following is not correct?

Accepted Answer

A)  Bob and Enid could each consume 100 tacos and 100 burritos without trade. 
B)  Neither Bob nor Enid could each consume 200 tacos and 200 burritos without trade. 
C)  Bob and Enid could each consume 200 tacos and 200 burritos with trade. 
D)  Total consumption of burritos could not be 600 either with or without trade. 
A)  Bob and Enid could each consume 100 tacos and 100 burritos without trade. 
B)  Neither Bob nor Enid could each consume 200 tacos and 200 burritos without trade. 
C)  Bob and Enid could each consume 200 tacos and 200 burritos with trade. 
D)  Total consumption of burritos could not be 600 either with or without trade.

Question 7

Figure 3-9
Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier    
-Refer to Figure 3-9.Uzbekistan has an absolute advantage in the production of

Accepted Answer

A)  bolts and a comparative advantage in the production of bolts. 
B)  bolts and a comparative advantage in the production of nails. 
C)  nails and a comparative advantage in the production of bolts. 
D)  nails and a comparative advantage in the production of nails. 
A)  bolts and a comparative advantage in the production of bolts. 
B)  bolts and a comparative advantage in the production of nails. 
C)  nails and a comparative advantage in the production of bolts. 
D)  nails and a comparative advantage in the production of nails.

Question 8

Figure 3-2
Peru's Production Possibilities Frontier  
-Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?

Accepted Answer

A)  6 emeralds and 60 rubies 
B)  4 emeralds and 120 rubies 
C)  3 emeralds and 160 rubies 
D)  1 emeralds and 210 rubies 
A)  6 emeralds and 60 rubies 
B)  4 emeralds and 120 rubies 
C)  3 emeralds and 160 rubies 
D)  1 emeralds and 210 rubies

Question 9

If he devotes all of his available resources to cantaloupe production,a farmer can produce 120 cantaloupes.If he sacrifices 1.5 watermelons for each cantaloupe that he produces,it follows that

Accepted Answer

A)  if he devotes all of his available resources to watermelon production,then he can produce 80 watermelons. 
B)  he cannot have a comparative advantage over other farmers in producing cantaloupes. 
C)  his opportunity cost of one watermelon is 2/3 of a cantaloupe. 
D)  his production possibilities frontier is bowed-out. 
A)  if he devotes all of his available resources to watermelon production,then he can produce 80 watermelons. 
B)  he cannot have a comparative advantage over other farmers in producing cantaloupes. 
C)  his opportunity cost of one watermelon is 2/3 of a cantaloupe. 
D)  his production possibilities frontier is bowed-out.

Question 10

Figure 3-4
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier    
-Refer to Figure 3-4.If Perry and Jordan each divides their time equally between writing novels and writing poems,then total production is

Accepted Answer

A)  2 novels and 6 poems. 
B)  3 novels and 12 poems. 
C)  4 novels and 12 poems. 
D)  6 novels and 24 poems. 
A)  2 novels and 6 poems. 
B)  3 novels and 12 poems. 
C)  4 novels and 12 poems. 
D)  6 novels and 24 poems.

Question 11

Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
  
-Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

Accepted Answer

A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor. 
A)  1/4 unit of cheese. 
B)  1/4 hour of labor. 
C)  4 units of cheese. 
D)  4 hours of labor.

Question 12

Table 3-1
Assume that Sardi and Tinaka can switch between producing corn and producing pork at a constant rate.
  
-Refer to Table 3-1.At which of the following prices would both Sardi and Tinaka gain from trade with each other?

Accepted Answer

A)  6 bushels of corn for 10.5 pounds of pork 
B)  12 bushels of corn for 19 pounds of pork 
C)  24 bushels of corn for 34 pounds of pork 
D)  Sardi and Tinaka could not both gain from trade with each other at any price. 
A)  6 bushels of corn for 10.5 pounds of pork 
B)  12 bushels of corn for 19 pounds of pork 
C)  24 bushels of corn for 34 pounds of pork 
D)  Sardi and Tinaka could not both gain from trade with each other at any price.

Question 13

Some countries win in international trade,while other countries lose.

Accepted Answer

A) True 
 B)False

Question 14

Figure 3-8
Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier    
-Refer to Figure 3-8.If the production possibilities frontiers shown are each for one day of production,then which of the following combinations of waffles and pancakes could Belgium and Latvia together not make in a given day?

Accepted Answer

A)  4 waffles and 17 pancakes 
B)  8 waffles and 14 pancakes 
C)  16 waffles and 9 pancakes 
D)  24 waffles and 3 pancakes 
A)  4 waffles and 17 pancakes 
B)  8 waffles and 14 pancakes 
C)  16 waffles and 9 pancakes 
D)  24 waffles and 3 pancakes

Question 15

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 has an absolute advantage in the production of

Accepted Answer

A)  toothbrushes and a comparative advantage in the production of toothbrushes. 
B)  toothbrushes and a comparative advantage in the production of hairbrushes. 
C)  hairbrushes and a comparative advantage in the production of toothbrushes. 
D)  hairbrushes and a comparative advantage in the production of hairbrushes. 
A)  toothbrushes and a comparative advantage in the production of toothbrushes. 
B)  toothbrushes and a comparative advantage in the production of hairbrushes. 
C)  hairbrushes and a comparative advantage in the production of toothbrushes. 
D)  hairbrushes and a comparative advantage in the production of hairbrushes.

Question 16

Figure 3-7
Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier    
-Refer to Figure 3-7.The opportunity cost of 1 cup for Juba is

Accepted Answer

A)  1/6 bowl. 
B)  2/3 bowl. 
C)  3/2 bowls. 
D)  6 bowls. 
A)  1/6 bowl. 
B)  2/3 bowl. 
C)  3/2 bowls. 
D)  6 bowls.

Question 17

Table 3-6
Assume that Hilda and Carlos can switch between producing quilts and producing dresses at a constant rate.
  
-Refer to Table 3-6.Hilda has an absolute advantage in the production of

Accepted Answer

A)  both goods and a comparative advantage in the production of quilts. 
B)  both goods and a comparative advantage in the production of dresses. 
C)  neither good and a comparative advantage in the production of quilts. 
D)  neither good and a comparative advantage in the production of dresses. 
A)  both goods and a comparative advantage in the production of quilts. 
B)  both goods and a comparative advantage in the production of dresses. 
C)  neither good and a comparative advantage in the production of quilts. 
D)  neither good and a comparative advantage in the production of dresses.

Question 18

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Then which of these pairs of points could be on Namibia's production possibilities frontier?

Accepted Answer

A)  (200 huts,30,000 bowls)and (150 huts,35,000 bowls) 
B)  (200 huts,40,000 bowls)and (150 huts,30,000 bowls) 
C)  (300 huts,50,000 bowl)and (200 huts,60,000 bowls) 
D)  (300 huts,60,000 bowls)and (200 huts,80,000 bowls) 
A)  (200 huts,30,000 bowls)and (150 huts,35,000 bowls) 
B)  (200 huts,40,000 bowls)and (150 huts,30,000 bowls) 
C)  (300 huts,50,000 bowl)and (200 huts,60,000 bowls) 
D)  (300 huts,60,000 bowls)and (200 huts,80,000 bowls)

Question 19

Which of the following statements about comparative advantage is not true?

Accepted Answer

A)  Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. 
B)  The principle of comparative advantage applies to countries as well as to individuals. 
C)  Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. 
D)  A country may have a comparative advantage in producing a good,even though it lacks an absolute advantage in producing that good. 
A)  Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. 
B)  The principle of comparative advantage applies to countries as well as to individuals. 
C)  Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. 
D)  A country may have a comparative advantage in producing a good,even though it lacks an absolute advantage in producing that good.

Question 20

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.Assume that Zimbabwe and Portugal each has 180 machine minutes available.If each country divides its time equally between the production of toothbrushes and hairbrushes,then total production is

Accepted Answer

A)  24 toothbrushes and 12 hairbrushes. 
B)  48 toothbrushes and 24 hairbrushes. 
C)  96 toothbrushes and 48 hairbrushes. 
D)  720 toothbrushes and 1440 hairbrushes. 
A)  24 toothbrushes and 12 hairbrushes. 
B)  48 toothbrushes and 24 hairbrushes. 
C)  96 toothbrushes and 48 hairbrushes. 
D)  720 toothbrushes and 1440 hairbrushes.

Exam 3: Interdependence and the Gains From Trade

Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

People who provide you with goods and services

Figure 3-3 Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier -Refer to Figure 3-3.If Bob and Enid both spend all of their time producing tacos,then total production is

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 an absolute advantage in the production of

Figure 3-3 Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier -Refer to Figure 3-3.Which of the following is not correct?

Figure 3-9 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-9.Uzbekistan has an absolute advantage in the production of

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?

If he devotes all of his available resources to cantaloupe production,a farmer can produce 120 cantaloupes.If he sacrifices 1.5 watermelons for each cantaloupe that he produces,it follows that

Figure 3-4 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-4.If Perry and Jordan each divides their time equally between writing novels and writing poems,then total production is

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

Table 3-1 Assume that Sardi and Tinaka can switch between producing corn and producing pork at a constant rate. -Refer to Table 3-1.At which of the following prices would both Sardi and Tinaka gain from trade with each other?

Some countries win in international trade,while other countries lose.

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 has an absolute advantage in the production of

Figure 3-7 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-7.The opportunity cost of 1 cup for Juba is

Table 3-6 Assume that Hilda and Carlos can switch between producing quilts and producing dresses at a constant rate. -Refer to Table 3-6.Hilda has an absolute advantage in the production of

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Then which of these pairs of points could be on Namibia's production possibilities frontier?

Which of the following statements about comparative advantage is not true?

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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