Exam 3: Interdependence and the Gains From Trade

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.If Fred and Ginger both specialize in the good in which they have a comparative advantage,what would the total consumption be?

Spain and Germany can both produce fish and cars.Spain has a comparative advantage in cars,but Germany has an absolute advantage in cars.What would Germany import from Spain?

Suppose Alberta and British Columbia (BC)have the production possibilities frontiers shown in the following graph.Suppose you wanted to determine which of the two provinces was economically better off.Is the given information sufficient? If yes,which province is better off? If not,make assumptions about the additional information that you need and determine which province is better off.How sensitive is your answer to variations in your assumptions?

Table 3-2 ​ -Refer to Table 3-2.What is the opportunity cost of 1 kilogram of meat for the farmer?

Table 3-6 ​ -Refer to Table 3-5.If Denmark and Italy trade based on the principle of comparative advantage,which country will export or import each product?

Figure 3-2 -Refer to Figure 3-2.What do the two producers have an absolute or comparative advantage in?

Table 3-4 ​ -Refer to the table.What is the opportunity cost of one birdhouse for Alberta?

Table 3-4 ​ -Refer to the table.If Alberta and Manitoba trade based on the principle of comparative advantage,what will happen?

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Figure 3-2 -Refer to Figure 3-2.Assume that both Paul and Cliff divide their time equally between the production of corn and wheat,and they do not trade.If they were the only producers of corn and wheat,what would the total production of wheat and corn be?

Trade is based on absolute advantage.

Figure 3-1 -Refer to Figure 3-1.What is the opportunity cost of 1 bushel of wheat for Cliff?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.If Fred and Ginger both specialize in the good in which they have a comparative advantage,what would the total production be?

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year,and a worker in Teeveeland can produce either 2 radios or 4 televisions per year.Each nation has 100 workers.Also suppose that each country completely specializes in producing the good for which it has a comparative advantage.If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year,what is each country's maximum consumption of new radios and televisions per year?

A rancher can produce only beef,while a farmer can produce only potatoes.If the rancher and the farmer like both foods,which of the following is most likely?

Julia can fix a meal in one hour,and her opportunity cost of one hour is $50.Jacque can fix the same kind of meal in two hours,and his opportunity cost of one hour is $20.Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5.What does each of the two producers have an absolute advantage in?

What is David Ricardo's contribution?

Table 3-6 ​ -Refer to Table 3-5.Which country has a comparative advantage in each product?

Table 3-6 ​ -Refer to Table 3-5.If Denmark and Italy specialize and trade according to their respective comparative advantage,who gains in the short run in Denmark?