Question 1

Which famous economist developed the principle of comparative advantage as we know it today?

Accepted Answer

A)  Adam Smith
B)  David Ricardo
C)  John Maynard Keynes
D)  Milton FriedmanE) A) and B)
F) A) and C)

Question 2

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.   
-Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Accepted Answer

A)  Alice's opportunity cost of 1 pitcher of lemonade is 1/2 of a pizza and Betty's opportunity cost of 1 pitcher of lemonade is 2/3 of a pizza.
B)  Alice's opportunity cost of 1 pitcher of lemonade is 2 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 1.5 pizzas.
C)  Alice's opportunity cost of 1 pitcher of lemonade is 10 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 10 pizzas.
D)  Alice's opportunity cost of 1 pitcher of lemonade is 200 pizzas and Betty's opportunity cost of 1 pitcher of lemonade is 300 pizzas.E) A) and D)
F) None of the above

Question 3

Figure 3-6
 
-Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

Accepted Answer

A)  6 hours
B)  7.5 hours
C)  37.5 hours
D)  50 hoursE) A) and C)
F) A) and B)

Question 4

Figure 3-2
Peru's Production Possibilities Frontier 
-Refer to Figure 3-2. If the production possibilities frontier shown is for one month of production, then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Accepted Answer

A)  7 emeralds and 40 rubies
B)  5 emeralds and 92 rubies
C)  3 emeralds and 165 rubies
D)  2 emeralds and 180 rubiesE) A) and B)
F) A) and C)

Question 5

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

Accepted Answer

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) A) and B)
F) B) and C)

Question 6

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. Aruba has an absolute advantage in the production of

Accepted Answer

A)  coolers and Iceland has an absolute advantage in the production of radios.
B)  radios and Iceland has an absolute advantage in the production of coolers.
C)  both goods and Iceland has an absolute advantage in the production of neither good.
D)  neither good and Iceland has an absolute advantage in the production of both goods.E) B) and D)
F) A) and D)

Question 7

The most obvious benefit of specialization and trade is that they allow us to

Accepted Answer

A)  work more hours per week than we otherwise would be able to work.
B)  consume more goods than we otherwise would be able to consume.
C)  spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.
D)  consume more goods by forcing people in other countries to consume fewer goods.E) A) and B)
F) B) and D)

Question 8

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

Accepted Answer

A)  if he devotes all of his available resources to watermelon production, then he can produce 80 watermelons.
B)  he cannot have a comparative advantage over other farmers in producing cantaloupes.
C)  his opportunity cost of one watermelon is 2/3 of a cantaloupe.
D)  his production possibilities frontier is bowed-out.E) C) and D)
F) B) and C)

Question 9

Figure 3-1
 
-Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Accepted Answer

A)  Panel (a) .
B)  Panel (b) .
C)  both Panel (a)  and Panel (b) .
D)  neither Panel (a)  nor Panel (b) .E) A) and B)
F) B) and C)

Question 10

Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. 
-Refer to Table 3-6. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring toasters along the horizontal axis, then

Accepted Answer

A)  the slope of Maya's production possibilities frontier would be -1.6 and the slope of Miguel's production possibilities frontier would be -2.
B)  the slope of Maya's production possibilities frontier would be -0.625 and the slope of Miguel's production possibilities frontier would be -0.5.
C)  the slope of Maya's production possibilities frontier would be 0.625 and the slope of Miguel's production possibilities frontier would be 0.5.
D)  the slope of Maya's production possibilities frontier would be 1.6 and the slope of Miguel's production possibilities frontier would be 2.E) None of the above
F) C) and D)

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

Figure 3-6
   
-Refer to Figure 3-6. Daisy has an absolute advantage in the production of

Accepted Answer

A)  both goods and a comparative advantage in the production of pies.
B)  both goods and a comparative advantage in the production of tarts.
C)  neither good and a comparative advantage in the production of pies.
D)  neither good and a comparative advantage in the production of tarts.E) A) and C)
F) C) and D)

Question 13

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

Accepted Answer

A)  1/4 unit of cheese.
B)  1/4 hour of labor.
C)  4 units of cheese.
D)  4 hours of labor.E) A) and B)
F) None of the above

Question 14

Adam Smith

Accepted Answer

A)  and David Ricardo both opposed free trade.
B)  opposed free trade, but David Ricardo supported it.
C)  supported free trade, but David Ricardo opposed it.
D)  and David Ricardo both supported free trade.E) A) and C)
F) All of the above

Question 15

Table 3-18
Chris and Tony's Production Opportunities
   Tomatores  Patta Sauce  Chris 10lbs 300 jars  Tony 14lbs280jars\begin{array} { | l | c | c | } \hline & 	ext { Tomatores } & 	ext { Patta Sauce } \\hline 	ext { Chris } & 10 \mathrm { lbs } & 	ext { 300 jars } \\hline 	ext { Tony } & 14 \mathrm { lbs } & 280 \mathrm { jars } \\hline\end{array} Chris  Tony ​ Tomatores 10lbs14lbs​ Patta Sauce  300 jars 280jars​​ 
-Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is

Accepted Answer

A)  2 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 3 jars of sauce.
B)  3 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 2 jars of sauce.
C)  20 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 30 jars of sauce.
D)  30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce. E) A) and B)
F) All of the above

Question 16

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. At which of the following prices would both Andia and Zardia gain from trade with each other?

Accepted Answer

A)  6 bushels of wheat for 10.5 pounds of beef
B)  12 bushels of wheat for 19 pounds of beef
C)  24 bushels of wheat for 34 pounds of beef
D)  Andia and Zardia could not both gain from trade with each other at any price.E) None of the above
F) All of the above

Question 17

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Accepted Answer

A) True 
 B)False

Question 18

Figure 3-7
 
-Refer to Figure 3-7. If the production possibilities frontier shown for Juba is for 2 hours of work, then how long does it take Juba to make one bowl?

Accepted Answer

A)  1/8 hour
B)  1/2 hour
C)  2 hours
D)  8 hoursE) A) and D)
F) A) and C)

Question 19

Figure 3-3
   
-Refer to Figure 3-3. Without trade, Arturo produced and consumed 240 tacos and 120 burritos and Dina produced and consumed 100 tacos and 150 burritos. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. As a result, Arturo gained

Accepted Answer

A)  20 tacos and 24 burritos and Dina gained 40 tacos and 6 burritos.
B)  20 tacos and 36 burritos and Dina gained 160 tacos and 6 burritos.
C)  260 tacos and 144 burritos and Dina gained 140 tacos and 156 burritos.
D)  260 tacos and 156 burritos and Dina gained 260 tacos and 156 burritos.E) B) and C)
F) B) and D)

Question 20

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 360 minutes available. If each person divides his time equally between the production of wheat and beef, then total production is

Accepted Answer

A)  10.5 bushels of wheat and 16.5 pounds of beef.
B)  21 bushels of wheat and 33 pounds of beef.
C)  35 bushels of wheat and 22 pounds of beef.
D)  42 bushels of wheat and 66 pounds of beef.E) All of the above
F) A) and B)

Exam 3: Interdependence and the Gains From Trade

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. At which of the following prices would both Andia and Zardia gain from trade with each other?

Correct Answer
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When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Correct Answer
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Figure 3-1 -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Correct Answer
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Figure 3-6 -Refer to Figure 3-6. Daisy has an absolute advantage in the production of

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Figure 3-6 -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

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Adam Smith

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Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Correct Answer
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The most obvious benefit of specialization and trade is that they allow us to

Correct Answer
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If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

Correct Answer
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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.

Correct Answer
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Figure 3-7 -Refer to Figure 3-7. If the production possibilities frontier shown for Juba is for 2 hours of work, then how long does it take Juba to make one bowl?

Correct Answer
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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. Aruba has an absolute advantage in the production of

Correct Answer
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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

Correct Answer
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Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for one month of production, then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Correct Answer
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Which famous economist developed the principle of comparative advantage as we know it today?

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

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. At which of the following prices would both Andia and Zardia gain from trade with each other?

Correct AnswerverifiedShow Answer

When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

Correct AnswerverifiedShow Answer

Figure 3-1 -Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6. Daisy has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-6 -Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?

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Adam Smith

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Figure 3-10 Alice and Betty's Production Possibilities in one 8-hour day. -Refer to Figure 3-10. What are Alice and Betty's opportunity costs of 1 pitcher of lemonade?

Correct AnswerverifiedShow Answer

The most obvious benefit of specialization and trade is that they allow us to

Correct AnswerverifiedShow Answer

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7. If the production possibilities frontier shown for Juba is for 2 hours of work, then how long does it take Juba to make one bowl?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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. Aruba has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

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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

Correct AnswerverifiedShow Answer

Figure 3-2 Peru's Production Possibilities Frontier -Refer to Figure 3-2. If the production possibilities frontier shown is for one month of production, then which of the following combinations of emeralds and rubies could Peru produce in a given month?

Correct AnswerverifiedShow Answer

Which famous economist developed the principle of comparative advantage as we know it today?

Correct AnswerverifiedShow Answer

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