Question 1

Figure 3-2 
-Refer to Figure 3-2. What do the two producers have an absolute advantage in?

Accepted Answer

A)   Paul has an absolute advantage in both wheat and corn.
B)   Paul has an absolute advantage in wheat, and Cliff has an absolute advantage in corn.
C)   Cliff has an absolute advantage in wheat, and Paul has an absolute advantage in corn.
D)   Cliff has an absolute advantage in both wheat and corn.E) B) and C)
F) A) and B)

Question 2

Which book did David Ricardo write?

Accepted Answer

A)   Inquiry into the Nature and Causes of the Wealth of Nations
B)   Principles of Political Economy and Taxation
C)   The General Theory of Prices and Employment
D)   Why Nations TradeE) None of the above
F) A) and B)

Question 3

Figure 3-4 
-Refer to Figure 3-4. What does each of the two producers have a comparative or absolute advantage in?

Accepted Answer

A)   Ben has a comparative advantage in wine, and Jerry has an absolute advantage in both goods.
B)   Ben has a comparative advantage in beer, and Jerry has an absolute advantage in both goods.
C)   Ben has a comparative advantage in beer, and Jerry has an absolute advantage in wine.
D)   Ben has a comparative advantage in wine, and Jerry has an absolute advantage in beer.E) All of the above
F) C) and D)

Question 4

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what could Canada gain from importing a car?

Accepted Answer

A)   a maximum of 1/6 airplane
B)   a maximum of 1/4 airplane
C)   a maximum of 1/3 airplane
D)   a maximum 3 airplanesE) A) and D)
F) A) and C)

Question 5

-Refer to Table 3-3. What is the opportunity cost of one sweater for Maria?

Accepted Answer

A)   2 coats
B)   3 coats
C)   4 coats
D)   5 coatsE) None of the above
F) A) and B)

Question 6

Figure 3-4 
-Refer to Figure 3-4. For Jerry, what is the opportunity cost of one bottle of wine?

Accepted Answer

A)   1/3 bottle of beer
B)   1/2 bottle of beer
C)   1 bottle of beer
D)   3 bottles of beerE) None of the above
F) B) and C)

Question 7

-Refer to Table 3-1. How could the farmer and rancher both benefit?

Accepted Answer

A)   by the farmer specializing in meat and the rancher specializing in potatoes
B)   by the farmer specializing in potatoes and the rancher specializing in meat
C)   by the farmer specializing in neither good and the rancher specializing in both goods
D)   by the farmer specializing in both goods and the rancher specializing in neither goodE) B) and C)
F) A) and D)

Question 8

-Refer to Table 3-6. Denmark and Italy trade according to the principle of comparative advantage. If the international price of bread is 2.5 units of cheese for 1 unit of bread, what is the gain from trade to Italy per unit of bread traded?

Accepted Answer

A)   0.5 units of cheese
B)   1.5 unit of cheese
C)   2.0 units of cheese
D)   2.5 units of cheeseE) A) and B)
F) C) and D)

Question 9

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.
Figure 3-7  
a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A.
b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts?
c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now?
d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the graphs the gain each country would receive from trade. Label these points B.

Accepted Answer

a. Alpha would be producing 125 units of...

Question 10

-Refer to Table 3-5. What is the opportunity cost of one airplane for Canada?

Accepted Answer

A)   1/4 car
B)   1/3 car
C)   3 cars
D)   4 carsE) A) and B)
F) B) and C)

Question 11

Antonio and Elyse are two woodworkers who both make kitchen cabinets and bathroom vanities. In one month, Antonio can make 12 kitchen cabinets or 36 bathroom vanities, where Elyse can make 10 kitchen cabinets or 50 bathroom vanities. What is the opportunity cost of 1 kitchen cabinet?

Accepted Answer

A)   1/5 bathroom vanity for Antonio and 1/3 bathroom vanity for Elyse
B)   5 bathroom vanities for Antonio and 3 bathroom vanities for Elyse
C)   1/3 bathroom vanity for Antonio and 1/5 bathroom vanity for Elyse
D)   3 bathroom vanities for Antonio and 5 bathroom vanities for ElyseE) B) and C)
F) A) and B)

Question 12

Tracy can fix a meal in one hour, and her opportunity cost of one hour is $40. Michel can fix the same kind of meal in two hours, and his opportunity cost of one hour is $15. Will both Tracy and Michel be better off if she pays him $35 per meal to fix her meals? Explain.

Accepted Answer

Because Tracy's opportunity co...

Question 13

Both Canada and the U.S. can produce equally tasty maple syrup. What determines which country will export maple syrup?

Accepted Answer

A)   how the opportunity cost in Canada compares to the opportunity cost in the U.S.
B)   how the costs of production in Canada compare to the costs of production in the U.S.
C)   how the costs of labour in Canada compare to the costs of labour in the U.S.
D)   how the costs of maple syrup in Canada compares to the cost of maple syrup in the U.S.E) A) and C)
F) B) and D)

Question 14

-Refer to Table 3-5. Which country has an absolute advantage in each product?

Accepted Answer

A)   Canada has an absolute advantage in airplanes, and Japan has an absolute advantage in cars.
B)   Canada has an absolute advantage in neither good, and Japan has an absolute advantage in both goods.
C)   Canada has an absolute advantage in cars, and Japan has an absolute advantage in airplanes.
D)   Canada has an absolute advantage in neither good, and Japan has an absolute advantage in cars.E) None of the above
F) A) and D)

Question 15

Which of the following is NOT an implication of our model of trade?

Accepted Answer

A)   Trade allows for specialization.
B)   Trade is good for nations.
C)   Trade is based on absolute advantage.
D)   Trade allows individuals to consume more than otherwise.E) A) and B)
F) A) and C)

Question 16

-Refer to Table 3-5. What is the opportunity cost of one car for Japan?

Accepted Answer

A)   1/4 airplane
B)   1/3 airplane
C)   3 airplanes
D)   4 airplanesE) All of the above
F) C) and D)

Question 17

Figure 3-3
Ice cream and cones are measured in kilograms. 
-Refer to Figure 3-3. What does each of the two producers have a comparative or absolute advantage in?

Accepted Answer

A)   Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in both goods.
B)   Ben has a comparative advantage in cones, and Jerry has an absolute advantage in ice cream.
C)   Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in neither good.
D)   Ben has a comparative advantage in ice cream, and Jerry has an absolute advantage in cones.E) A) and D)
F) None of the above

Question 18

What are imports?

Accepted Answer

A)   people who work in foreign countries
B)   goods produced domestically and sold abroad
C)   whatever is given up to obtain some item
D)   goods produced abroad and sold domesticallyE) All of the above
F) A) and D)

Question 19

-Refer to Table 3-1. What does each producer have an absolute advantage in?

Accepted Answer

A)   The farmer has an absolute advantage in meat, and the rancher has an absolute advantage in potatoes.
B)   The farmer has an absolute advantage in potatoes, and the rancher has an absolute advantage in meat.
C)   The rancher has an absolute advantage in neither good, and the farmer has an absolute advantage in both goods.
D)   The farmer has an absolute advantage in neither good, and the rancher has an absolute advantage in both goods.E) B) and D)
F) None of the above

Question 20

-Refer to Table 3-3. What is the opportunity cost of one coat for Courtney?

Accepted Answer

A)   1/4 sweater
B)   1 sweater
C)   4 sweaters
D)   5 sweatersE) A) and B)
F) All of the above

Exam 3: Interdependence and the Gains From Trade

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3. What does each of the two producers have a comparative or absolute advantage in?

Correct Answer
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-Refer to Table 3-5. Which country has an absolute advantage in each product?

Correct Answer
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Figure 3-4 -Refer to Figure 3-4. For Jerry, what is the opportunity cost of one bottle of wine?

Correct Answer
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Tracy can fix a meal in one hour, and her opportunity cost of one hour is $40. Michel can fix the same kind of meal in two hours, and his opportunity cost of one hour is $15. Will both Tracy and Michel be better off if she pays him $35 per meal to fix her meals? Explain.

Correct Answer
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Because Tracy's opportunity co...
View Answer

Which book did David Ricardo write?

Correct Answer
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-Refer to Table 3-1. How could the farmer and rancher both benefit?

Correct Answer
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-Refer to Table 3-3. What is the opportunity cost of one coat for Courtney?

Correct Answer
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What are imports?

Correct Answer
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Figure 3-4 -Refer to Figure 3-4. What does each of the two producers have a comparative or absolute advantage in?

Correct Answer
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-Refer to Table 3-6. Denmark and Italy trade according to the principle of comparative advantage. If the international price of bread is 2.5 units of cheese for 1 unit of bread, what is the gain from trade to Italy per unit of bread traded?

Correct Answer
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-Refer to Table 3-5. What is the opportunity cost of one airplane for Canada?

Correct Answer
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Figure 3-2 -Refer to Figure 3-2. What do the two producers have an absolute advantage in?

Correct Answer
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Correct Answer
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a. Alpha would be producing 125 units of...
View Answer

Which of the following is NOT an implication of our model of trade?

Correct Answer
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-Refer to Table 3-5. What is the opportunity cost of one car for Japan?

Correct Answer
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-Refer to Table 3-1. What does each producer have an absolute advantage in?

Correct Answer
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Both Canada and the U.S. can produce equally tasty maple syrup. What determines which country will export maple syrup?

Correct Answer
verified

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what could Canada gain from importing a car?

Correct Answer
verified

Antonio and Elyse are two woodworkers who both make kitchen cabinets and bathroom vanities. In one month, Antonio can make 12 kitchen cabinets or 36 bathroom vanities, where Elyse can make 10 kitchen cabinets or 50 bathroom vanities. What is the opportunity cost of 1 kitchen cabinet?

Correct Answer
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-Refer to Table 3-3. What is the opportunity cost of one sweater for Maria?

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3. What does each of the two producers have a comparative or absolute advantage in?

Correct AnswerverifiedShow Answer

-Refer to Table 3-5. Which country has an absolute advantage in each product?

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. For Jerry, what is the opportunity cost of one bottle of wine?

Correct AnswerverifiedShow Answer

Tracy can fix a meal in one hour, and her opportunity cost of one hour is $40. Michel can fix the same kind of meal in two hours, and his opportunity cost of one hour is $15. Will both Tracy and Michel be better off if she pays him $35 per meal to fix her meals? Explain.

Correct AnswerverifiedBecause Tracy's opportunity co...View AnswerShow Answer

Which book did David Ricardo write?

Correct AnswerverifiedShow Answer

-Refer to Table 3-1. How could the farmer and rancher both benefit?

Correct AnswerverifiedShow Answer

-Refer to Table 3-3. What is the opportunity cost of one coat for Courtney?

Correct AnswerverifiedShow Answer

What are imports?

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. What does each of the two producers have a comparative or absolute advantage in?

Correct AnswerverifiedShow Answer

-Refer to Table 3-6. Denmark and Italy trade according to the principle of comparative advantage. If the international price of bread is 2.5 units of cheese for 1 unit of bread, what is the gain from trade to Italy per unit of bread traded?

Correct AnswerverifiedShow Answer

-Refer to Table 3-5. What is the opportunity cost of one airplane for Canada?

Correct AnswerverifiedShow Answer

Figure 3-2 -Refer to Figure 3-2. What do the two producers have an absolute advantage in?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Alpha would be producing 125 units of...View AnswerShow Answer

Which of the following is NOT an implication of our model of trade?

Correct AnswerverifiedShow Answer

-Refer to Table 3-5. What is the opportunity cost of one car for Japan?

Correct AnswerverifiedShow Answer

-Refer to Table 3-1. What does each producer have an absolute advantage in?

Correct AnswerverifiedShow Answer

Both Canada and the U.S. can produce equally tasty maple syrup. What determines which country will export maple syrup?

Correct AnswerverifiedShow Answer

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what could Canada gain from importing a car?

Correct AnswerverifiedShow Answer

Antonio and Elyse are two woodworkers who both make kitchen cabinets and bathroom vanities. In one month, Antonio can make 12 kitchen cabinets or 36 bathroom vanities, where Elyse can make 10 kitchen cabinets or 50 bathroom vanities. What is the opportunity cost of 1 kitchen cabinet?

Correct AnswerverifiedShow Answer

-Refer to Table 3-3. What is the opportunity cost of one sweater for Maria?

Correct AnswerverifiedShow Answer

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Because Tracy's opportunity co...
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a. Alpha would be producing 125 units of...
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