Question 1

Table 3-8
Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate.
 
-Refer to Table 3-8.The opportunity cost of 1 basket for Kito is

Accepted Answer

A)  1/4 birdhouse. 
B)  2/3 birdhouse. 
C)  3/2 birdhouses. 
D)  4 birdhouses.

Question 2

Figure 3-2
Peru's Production Possibilities Frontier 
-Refer to Figure 3-2.Suppose Peru decides to increase its production of emeralds by 2.What is the opportunity cost of this decision?

Accepted Answer

A)  30 rubies 
B)  40 rubies 
C)  60 rubies 
D)  120 rubies

Question 3

Figure 3-9
Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier  
-Refer to Figure 3-9.If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails,then

Accepted Answer

A)  neither Uzbekistan nor Azerbaijan will gain from this trade. 
B)  Uzbekistan will gain from this trade,but Azerbaijan will not. 
C)  Azerbaijan will gain from this trade,but Uzbekistan will not. 
D)  both Uzbekistan and Azerbaijan will gain from this trade.

Question 4

It takes Anne 3 hours to make a pie and 4 hours to make a shirt.It takes Mary 2 hours to make a pie and 5 hours to make a shirt.Anne should specialize in making shirts and Mary should specialize in making pies,and they should trade.

Accepted Answer

A) True 
 B)False

Question 5

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Accepted Answer

A)  Is it possible for specialization and trade to benefit more than one party to a trade? 
B)  Is it possible for specialization and trade to increase total output of traded goods? 
C)  Do opportunity costs play a role in people's decisions to specialize in certain activities? 
D)  What determines the price at which trade takes place?

Question 6

Which of the following is not a reason people choose to depend on others for goods and services?

Accepted Answer

A)  to improve their lives 
B)  to allow them to enjoy a greater variety of goods and services 
C)  to consume more of each good without working any more hours 
D)  to allow people to produce outside their production possibilities frontiers

Question 7

Figure 3-6
Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier  
-Refer to Figure 3-6.Suppose Daisy decides to increase her production of pies by 6.What is the opportunity cost of this decision?

Accepted Answer

A)  8/3 tarts 
B)  4.5 tarts 
C)  8 tarts 
D)  10 tarts

Question 8

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?

Accepted Answer

A)  9 bolts and 122 nails 
B)  21 bolts and 98 nails 
C)  36 bolts and 56 nails 
D)  46 bolts and 18 nails

Question 9

Differences in opportunity cost allow for gains from trade.

Accepted Answer

A) True 
 B)False

Question 10

If one producer is able to produce a good at a lower opportunity cost than some other producer,then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Accepted Answer

A) True 
 B)False

Question 11

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 12

Figure 3-8
Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier  
-Refer to Figure 3-8.Belgium and Latvia would not be able to gain from trade if Latvia's opportunity cost of one pancake changed to

Accepted Answer

A)  1/2 waffle. 
B)  3/4 waffle. 
C)  4/3 waffles. 
D)  2 waffles.

Question 13

Figure 3-7
Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier  
-Refer to Figure 3-7.Suppose Juba is willing to trade one bowl to Bintu for every two cups that Bintu makes and sends to Juba.Which of the following combinations of bowls and cups could Bintu then consume,assuming Bintu specializes in making cups and Juba specializes in making bowls?

Accepted Answer

A)  1 bowl and 7 cups 
B)  2 bowls and 4 cups 
C)  3 bowls and 3 cups 
D)  4 bowls and 1 cup

Question 14

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-7.Korea has an absolute advantage in the production of

Accepted Answer

A)  cars and a comparative advantage in the production of cars. 
B)  cars and a comparative advantage in the production of airplanes. 
C)  neither good and a comparative advantage in the production of cars. 
D)  neither good and a comparative advantage in the production of airplanes.

Question 15

Figure 3-5
Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier  
-Refer to Figure 3-5.If the production possibilities frontier shown for Chirag is for 8 hours of work,then how long does it take Chirag to make one purse?

Accepted Answer

A)  1/2 hour 
B)  2 hours 
C)  4 hours 
D)  8 hours

Question 16

Figure 3-4
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier  
-Refer to Figure 3-4.The opportunity cost of 1 novel for Perry is

Accepted Answer

A)  1/6 poem. 
B)  2 poems. 
C)  6 poems. 
D)  12 poems.

Question 17

Figure 3-5
Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier  
-Refer to Figure 3-5.Puneet's opportunity cost of one wallet is

Accepted Answer

A)  4/5 purse and Chirag's opportunity cost of one wallet is 2/3 purse. 
B)  4/5 purse and Chirag's opportunity cost of one wallet is 3/2 purses. 
C)  5/4 purses and Chirag's opportunity cost of one wallet is 2/3 purse. 
D)  5/4 purses and Chirag's opportunity cost of one wallet is 3/2 purses.

Question 18

Figure 3-5
Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier  
-Refer to Figure 3-5.Chirag should specialize in the production of

Accepted Answer

A)  purses. 
B)  wallets. 
C)  both goods. 
D)  neither good.

Question 19

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

Accepted Answer

A)  Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks. 
B)  Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks. 
C)  Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats. 
D)  Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

Question 20

Table 3-8
Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate.
 
-Refer to Table 3-8.The opportunity cost of 1 birdhouse for Kito is

Accepted Answer

A)  1/4 basket. 
B)  2/3 basket. 
C)  3/2 baskets. 
D)  4 baskets.

Exam 3: Interdependence and the Gains From Trade

Table 3-8 Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate. -Refer to Table 3-8.The opportunity cost of 1 basket for Kito is

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.Suppose Peru decides to increase its production of emeralds by 2.What is the opportunity cost of this decision?

It takes Anne 3 hours to make a pie and 4 hours to make a shirt.It takes Mary 2 hours to make a pie and 5 hours to make a shirt.Anne should specialize in making shirts and Mary should specialize in making pies,and they should trade.

The principle of comparative advantage does not provide answers to certain questions.One of those questions is

Which of the following is not a reason people choose to depend on others for goods and services?

Figure 3-6 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-6.Suppose Daisy decides to increase her production of pies by 6.What is the opportunity cost of this decision?

Differences in opportunity cost allow for gains from trade.

If one producer is able to produce a good at a lower opportunity cost than some other producer,then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Figure 3-8 Belgium's Production Possibilities Frontier Latvia's Production Possibilities Frontier -Refer to Figure 3-8.Belgium and Latvia would not be able to gain from trade if Latvia's opportunity cost of one pancake changed to

Table 3-7 Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. -Refer to Table 3-7.Korea has an absolute advantage in the production of

Figure 3-5 Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier -Refer to Figure 3-5.If the production possibilities frontier shown for Chirag is for 8 hours of work,then how long does it take Chirag to make one purse?

Figure 3-4 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-4.The opportunity cost of 1 novel for Perry is

Figure 3-5 Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier -Refer to Figure 3-5.Puneet's opportunity cost of one wallet is

Figure 3-5 Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier -Refer to Figure 3-5.Chirag should specialize in the production of

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

Table 3-8 Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate. -Refer to Table 3-8.The opportunity cost of 1 birdhouse for Kito is