Question 1

Figure 3-15
Perry's Production Possibilities Frontier
Jordan's Production Possibilities Frontier  
-Refer to Figure 3-15.Which of the following is not correct?

Accepted Answer

A) Perry and Jordan could each consume 2 novels and 6 poems without trade. 
B) Jordan could consume 2 novels and 6 poems both with and without trade. 
C) Perry and Jordan could each consume 2 novels and 6 poems with trade. 
D) Perry and Jordan could each consume 12 poems without trade.

Question 2

Figure 3-18
Bintu's Production Possibilities Frontier
Juba's Production Possibilities Frontier  
-Refer to Figure 3-18.Bintu has an absolute advantage in the production of

Accepted Answer

A) bowls and Juba has an absolute advantage in the production of cups. 
B) cups and Juba has an absolute advantage in the production of bowls. 
C) both goods and Juba has an absolute advantage in the production of neither good. 
D) neither good and Juba has an absolute advantage in the production of both goods.

Question 3

Figure 3-20
Canada's Production Possibilities Frontier
Mexico's Production Possibilities Frontier  
-Refer to Figure 3-20.Canada has an absolute advantage in the production of

Accepted Answer

A) Good X and Mexico has an absolute advantage in the production of Good Y. 
B) Good Y and Mexico has an absolute advantage in the production of Good X. 
C) both goods and Mexico has an absolute advantage in the production of neither good. 
D) neither good and Mexico has an absolute advantage in the production of both goods.

Question 4

Figure 3-14
Arturo's Production Possibilities Frontier
Dina's Production Possibilities Frontier  
-Refer to Figure 3-14.Arturo's opportunity cost of one burrito is

Accepted Answer

A) 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco. 
B) 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos. 
C) 4/3 tacos and Dina's opportunity cost of one burrito is 1/2 taco. 
D) 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos.

Question 5

Figure 3-19
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier  
-Refer to Figure 3-19.Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by

Accepted Answer

A) 12 pounds. 
B) 18 pounds. 
C) 36 pounds. 
D) 48 pounds.

Question 6

Figure 3-21
Uzbekistan's Production Possibilities Frontier
Azerbaijan's Production Possibilities Frontier  
-Refer to Figure 3-21.If Uzbekistan and Azerbaijan switch from each country dividing its time equally between the production of bolts and nails to each country spending all of its time producing the good in which it has a comparative advantage,then total production will increase by

Accepted Answer

A) 5 bolts and 10 nails. 
B) 15 bolts and 40 nails. 
C) 20 bolts and 50 nails. 
D) 30 bolts and 80 nails.

Question 7

The gains from trade are

Accepted Answer

A) evident in economic models,but seldom observed in the real world. 
B) evident in the real world,but impossible to capture in economic models. 
C) a result of more efficient resource allocation than would be observed in the absence of trade. 
D) based on the principle of absolute advantage.

Question 8

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

Accepted Answer

A) 30 units of corn and 30 units of wheat. 
B) 40 units of corn and 30 units of wheat. 
C) 40 units of corn and 20 units of wheat. 
D) 10 units of corn and 40 units of wheat.

Question 9

Figure 3-17
Maxine's Production Possibilities Frontier
Daisy's Production Possibilities Frontier  
-Refer to Figure 3-17.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 10

Figure 3-14
Arturo's Production Possibilities Frontier
Dina's Production Possibilities Frontier  
-Refer to Figure 3-14.Which of the following is not correct?

Accepted Answer

A) Arturo and Dina could each consume 100 tacos and 100 burritos without trade. 
B) Neither Arturo nor Dina could each consume 200 tacos and 200 burritos without trade. 
C) Arturo and Dina 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 11

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 Azerbaijan then consume,assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?

Accepted Answer

A) 8 bolts and 56 nails 
B) 14 bolts and 44 nails 
C) 18 bolts and 32 nails 
D) 20 bolts and 26 nails

Question 12

Figure 3-20
Canada's Production Possibilities Frontier
Mexico's Production Possibilities Frontier  
-Refer to Figure 3-20.Canada has a comparative advantage in the production of

Accepted Answer

A) Good X and Mexico has a comparative advantage in the production of Good Y. 
B) Good Y and Mexico has a comparative advantage in the production of Good X. 
C) both goods and Mexico has a comparative advantage in the production of neither good. 
D) neither good and Mexico has a comparative advantage in the production of both goods.

Question 13

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then

Accepted Answer

A) Tom must have an absolute advantage in the production of baseball bats. 
B) Jim must have an absolute advantage in the production of baseball bats. 
C) Tom has a comparative advantage in the production of baseball bats. 
D) Jim has a comparative advantage in the production of baseball bats.

Question 14

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.For many years the two countries traded,each completely specializing according to their respective comparative advantages.Now,however,war has broken out between them and all trade has stopped.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.The war has caused the combined yearly output of the two countries to decline by

Accepted Answer

A) 10 units of corn and 10 units of wheat. 
B) 20 units of corn and 20 units of wheat. 
C) 30 units of corn and 30 units of wheat. 
D) 40 units of corn and 40 units of wheat.

Question 15

Figure 3-19
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier  
-Refer to Figure 3-19.If Chile and Colombia each spends all of its time producing the good in which it has a comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds of soybeans,then Chile will consume

Accepted Answer

A) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
B) 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. 
C) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. 
D) 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans.

Question 16

If labor in Mexico is less productive than labor in the United States in all areas of production,

Accepted Answer

A) then neither nation can benefit from trade. 
B) then Mexico can benefit from trade but the United States cannot. 
C) then the United States will have a comparative advantage relative to Mexico in the production of all goods. 
D) then both Mexico and the United States still can benefit from trade.

Question 17

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Accepted Answer

A) Susan has an absolute advantage over Paul in washing windows. 
B) Susan has a comparative advantage over Paul in washing windows. 
C) Paul has a comparative advantage over Susan in ironing shirts. 
D) All of the above are correct.

Question 18

Figure 3-15
Perry's Production Possibilities Frontier
Jordan's Production Possibilities Frontier  
-Refer to Figure 3-15.Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry.Which of the following combinations of novels and poems could Jordan then consume,assuming Jordan specializes in novel production and Perry specializes in poem production?

Accepted Answer

A) 1 novel and 14 poems 
B) 2 novels and 8 poems 
C) 3 novels and 6 poems 
D) 4 novels and 2 poems

Question 19

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.If the two countries do not trade,Cornland will produce and consume 400 bushels of corn and 100 bushels of oats,while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats.If each country made the decision to specialize in producing the good in which it has a comparative advantage,then the combined yearly output of the two countries would increase by

Accepted Answer

A) 280 bushels of corn and 450 bushels of oats. 
B) 340 bushels of corn and 500 bushels of oats. 
C) 360 bushels of corn and 520 bushels of oats. 
D) 360 bushels of corn and 640 bushels of oats.

Question 20

Figure 3-15
Perry's Production Possibilities Frontier
Jordan's Production Possibilities Frontier  
-Refer to Figure 3-15.If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems,then

Accepted Answer

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

Exam 3: Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15.Which of the following is not correct?

Figure 3-18 Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier -Refer to Figure 3-18.Bintu has an absolute advantage in the production of

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20.Canada has an absolute advantage in the production of

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14.Arturo's opportunity cost of one burrito is

Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19.Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by

The gains from trade are

Figure 3-17 Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier -Refer to Figure 3-17.Suppose Daisy decides to increase her production of pies by 6.What is the opportunity cost of this decision?

Figure 3-14 Arturo's Production Possibilities Frontier Dina's Production Possibilities Frontier -Refer to Figure 3-14.Which of the following is not correct?

Figure 3-20 Canada's Production Possibilities Frontier Mexico's Production Possibilities Frontier -Refer to Figure 3-20.Canada has a comparative advantage in the production of

Suppose Jim and Tom can both produce baseball bats.If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats,then

If labor in Mexico is less productive than labor in the United States in all areas of production,

Suppose Susan can wash three windows per hour or she can iron six shirts per hour.Paul can wash two windows per hour or he can iron five shirts per hour.

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15.If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems,then