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Exam 3: Interdependence and the Gains from Trade.

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Question 141

True/False

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Unless two people who are producing two goods have exactly the same opportunity costs,then one person will have a comparative advantage in one good,and the other person will have a comparative advantage in the other good.

A) True
B) False

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Question 142

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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 in which it has a comparative advantage.If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year,then each country's maximum consumption of new radios and televisions per year will be

A) 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland.
B) 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland.
C) 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland.
D) 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

E) B) and C)
F) All of the above

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Question 143

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Figure 3-4 -Refer to Figure 3-4.Perry should specialize in the production of

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.What is Zardia's opportunity cost of producing one bushel of wheat?

Table 3-12 -Refer to Table 3-1.For the farmer,the opportunity cost of 15 pounds of meat is

If a country has a lower opportunity cost than its potential trading partner,the country should decide to be self-sufficient.

Figure 3-9 -Refer to Figure 3-9.Without trade,Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails.As a result,Uzbekistan gained

Table 3-2 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-2.Iceland should export

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. -Refer to Table 3-1.Assume that Andia and Zardia each has 60 minutes available.If each person spends all his time producing the good in which he has a comparative advantage,then total production is

Gary and Diane must prepare a presentation for their marketing class.As part of their presentation,they must do a series of calculations and prepare 50 PowerPoint slides.It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides.It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides. a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? c.If Diane and Gary have the same opportunity cost of $5 per hour,is there a better solution than for each to specialize in calculating or preparing slides?

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.

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

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

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.Suppose Peru decides to increase its production of rubies by 30.What is the opportunity cost of this decision?

The producer that requires a smaller quantity of inputs to produce a certain amount of a good,relative to the quantities of inputs required by other producers to produce the same amount of that good,

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2.Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar.Which of the following combinations of emeralds and rubies could Peru then consume,assuming Peru specializes in emerald production?

Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. -Refer to Table 3-5.The opportunity cost of 1 unit of bread for England is

Assume for the United States that the opportunity cost of each airplane is 100 cars.Which of these pairs of points could be on the United States' production possibilities frontier?

In an economy consisting of two people producing two goods,it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Which of these pairs of points could be on Namibia's production possibilities frontier?