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Exam 3: Interdependence and the Gains From Trade

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Question 1

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Table 3-12 -Refer to Table 3-1.For the farmer,12.8 pounds of

A) meat is the opportunity cost of 10.6 pounds of potatoes.
B) meat is the opportunity cost of 16.0 pounds of potatoes.
C) potatoes is the opportunity cost of 6.8 pounds of meat.
D) potatoes is the opportunity cost of 8.0 pounds of meat.

E) A) and D)
F) None of the above

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Question 2

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Suppose the United States has a comparative advantage over Mexico in producing pork.The principle of comparative advantage asserts that

A) the United States should produce more pork than what it requires and export some of it to Mexico.
B) the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico.
C) the United States should refrain altogether from producing pork and import all of what it requires from Mexico.
D) Mexico has nothing to gain from importing United States pork.

E) A) and B)
F) B) and D)

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Question 3

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As long as two people have different opportunity costs,each can gain from trade with the other,since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Figure 3-3 Arturo’s Production Possibilities FrontierFrontier Dina’s Production Possibilities -Refer to Figure 3-3.Arturo and Dina would not be able to gain from trade if Dina's opportunity cost of one taco changed to

Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. -Which of the following is not an example of the principle that trade can make everyone better off?

Table 3-12 -Refer to Table 3-1.Relative to the farmer,the rancher has an absolute advantage in the production of

Figure 3-3 Arturo’s Production Possibilities FrontierFrontier Dina’s Production Possibilities -Refer to Figure 3-3.Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo.Which of the following combinations of tacos and burritos could Dina then consume,assuming Dina specializes in taco production and Arturo specializes in burrito production?

Table 3-8 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. -Refer to Table 3-8.Min has an absolute advantage in the production of

Figure 3-9 Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier -Refer to Figure 3-9.Suppose Uzbekistan decides to increase its production of bolts by 10.What is the opportunity cost of this decision?

Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier -Refer to Figure 3-7.Bintu has a comparative advantage in the production of

Ellie and Brendan both produce apple pies and vanilla ice cream.If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream,Ellie has a comparative advantage in the production of ice cream.

A person can benefit from specialization and trade by obtaining a good at a price that is

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

Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier -Refer to Figure 3-4.If Jordan must work 3 months to write each novel,then her production possibilities frontier is based on how many months of work?

Opportunity cost measures the trade-off between two goods that each producer faces.

Figure 3-9 Uzbekistan’s Production Possibilities Frontier Frontier Azerbaijan’s Production Possibilities -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?

Timmy can edit 2 pages in one minute and he can type 80 words in one minute.Olivia can edit 1 page in one minute and she can type 100 words in one minute.Timmy has an absolute advantage and a comparative advantage in editing,while Olivia has an absolute advantage and a comparative advantage in typing.

Explain the difference between absolute advantage and comparative advantage.Which is more important in determining trade patterns,absolute advantage or comparative advantage? Why?

If Korea is capable of producing either shoes or soccer balls or some combination of the two,then

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.Japan has an absolute advantage in the production of