Exam 3: Interdependence and the Gains From Trade

Fred trades 2 tomatoes to Barney in exchange for 1 pumpkin. Fred and Barney both gain from the exchange. We can conclude that, for Barney, the opportunity cost of producing 1 pumpkin is greater than 2 tomatoes.

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers. Alpha's Production Possibilities Frontier Omega's Production Possibilities Frontier a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A. b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts? c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now? d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the graphs the gain each country would receive from trade. Label these points B.

Consider two individuals - Marquis and Serena - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Figure 3-26 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-26. What is Mary's opportunity cost of one muffin?

Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Japan's opportunity cost of one car is

Table 3-35 -Refer to Table 3-35. Which goods) does Finland have an absolute advantage producing?

When there are two people and each is capable of producing two goods, it is possible for one person to have a comparative advantage over the other in both goods.

Table 3-11 Assume that Max and Min can switch between producing mittens and producing hats at a constant rate. -Refer to Table 3-11. Which of the following points would not be on Max's production possibilities frontier, based on a 36-hour production period?

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?

Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless

Table 3-26 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-26. Korea has an absolute 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. The opportunity cost of 1 mixer for Maya is

Table 3-35 -Refer to Table 3-35. Finland's opportunity cost of producing 1 unit of ham is

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 farmer should specialize in the production of

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.

For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to

Figure 3-9 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together not make in a given 2-day production period?

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's opportunity cost of testing one cellular phone is programming

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

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