Question 1

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

Accepted Answer

A)  30 rubies
B)  40 rubies
C)  60 rubies
D)  120 rubiesE) A) and B)
F) B) and D)

Question 2

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 and Iceland would not be able to gain from trade if Iceland's opportunity cost of one radio changed to

Accepted Answer

A)  0 coolers.
B)  0.25 coolers.
C)  2.5 coolers.
D)  Aruba and Iceland can always gain from trade regardless of their opportunity costs.E) A) and D)
F) A) and C)

Question 3

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. 
-Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?

Accepted Answer

A)  1 toothbrush and 4 hairbrushes
B)  4 toothbrushes and 2 hairbrushes
C)  5 toothbrushes and 6 hairbrushes
D)  6 toothbrushes and 5 hairbrushesE) A) and D)
F) B) and C)

Question 4

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?

Accepted Answer

A)  2 emeralds and 240 rubies
B)  3 emeralds and 220 rubies
C)  4 emeralds and 200 rubies
D)  5 emeralds and 140 rubiesE) A) and D)
F) C) and D)

Question 5

Figure 3-8
   
-Refer to Figure 3-8. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Accepted Answer

A)  12 pounds.
B)  27 pounds.
C)  30 pounds.
D)  48 pounds.E) B) and D)
F) A) and D)

Question 6

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Accepted Answer

A) True 
 B)False  True

Question 7

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Accepted Answer

A)  the two countries' combined output of both goods will be higher than it would be in the absence of trade.
B)  Greece will produce more fish than it would produce in the absence of trade.
C)  Germany will produce more cars than it would produce in the absence of trade.
D)  All of the above are correct.E) A) and D)
F) B) and D)

Question 8

Figure 3-4
   
-Refer to Figure 3-4. Perry has an absolute advantage in the production of

Accepted Answer

A)  novels and Jordan has an absolute advantage in the production of poems.
B)  poems and Jordan has an absolute advantage in the production of novels.
C)  novels and Jordan has an absolute advantage in the production of neither good.
D)  neither good and Jordan has an absolute advantage in the production of novels.E) B) and C)
F) All of the above

Question 9

Figure 3-7
   
-Refer to Figure 3-7. The opportunity cost of 1 bowl for Bintu is

Accepted Answer

A)  1/4 cup.
B)  1/2 cup.
C)  2 cups.
D)  4 cups.E) A) and D)
F) A) and C)

Question 10

A country that currently does not trade with other countries could benefit by

Accepted Answer

A)  restricting imports and promoting exports.
B)  promoting imports and restricting exports.
C)  restricting both imports and exports.
D)  not restricting trade.E) C) and D)
F) B) and C)

Question 11

Table 3-10
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. 
-Refer to Table 3-10. Which of the following points would be on Shantala's production possibilities frontier, based on a 40-hour week?

Accepted Answer

A)  (120 cellular phones programmed, 250 cellular phones tested) 
B)  (180 cellular phones programmed, 150 cellular phones tested) 
C)  (240 cellular phones programmed, 600 cellular phones tested) 
D)  More than one of the above would be on Shantala's production possibilities frontier.E) All of the above
F) C) and D) B

Question 12

Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make than to buy.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

People who provide you with goods and services

Accepted Answer

A)  are acting out of generosity.
B)  do so because they get something in return.
C)  have chosen not to become interdependent.
D)  are required to do so by the government.E) C) and D)
F) A) and D)

Question 15

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. 
-Refer to Figure 3-11. In the nation of Cropitia, the opportunity cost of a pound of cheese is 1.5 pounds of ham. Based on this information, if Bonovia and Cropitia want to trade, Cropitia should specialize,in the production of

Accepted Answer

A)  ham and import cheese.
B)  cheese and import ham.
C)  both goods and import neither good.
D)  neither good and import both goods..E) B) and D)
F) B) and C)

Question 16

The gains from specialization and trade are based on absolute advantage.

Accepted Answer

A) True 
 B)False  False

Question 17

Adam Smith asserted that a person should never attempt to make at home

Accepted Answer

A)  what it will cost him more to make than to buy.
B)  any good in which that person does not have an absolute advantage.
C)  any luxury good.
D)  any necessity.E) C) and D)
F) A) and C)

Question 18

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. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring airplanes along the horizontal axis, then

Accepted Answer

A)  the slope of Japan's production possibilities frontier would be -5 and the slope of Korea's production possibilities frontier would be -3.
B)  the slope of Japan's production possibilities frontier would be -0.2 and the slope of Korea's production possibilities frontier would be -0.33.
C)  the slope of Japan's production possibilities frontier would be 0.2 and the slope of Korea's production possibilities frontier would be 0.33.
D)  the slope of Japan's production possibilities frontier would be 5 and the slope of Korea's production possibilities frontier would be 3.E) B) and C)
F) B) and D)

Question 19

Figure 3-8
   
-Refer to Figure 3-8. At which of the following prices would both Chile and Colombia gain from trade with each other?

Accepted Answer

A)  6 pounds of soybeans for 9 pounds of coffee
B)  8 pounds of soybeans for 20 pounds of coffee
C)  11 pounds of soybeans for 33 pounds of coffee
D)  Chile and Colombia could not both gain from trade with each other at any price.E) A) and C)
F) A) and D)

Question 20

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

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

Correct Answer
verified

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 and Iceland would not be able to gain from trade if Iceland's opportunity cost of one radio changed to

Correct Answer
verified

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?

Correct Answer
verified

Correct Answer
verified

Figure 3-8 -Refer to Figure 3-8. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Correct Answer
verified

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Correct Answer
verified
True

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Correct Answer
verified

Figure 3-4 -Refer to Figure 3-4. Perry has an absolute advantage in the production of

Correct Answer
verified

Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 bowl for Bintu is

Correct Answer
verified

A country that currently does not trade with other countries could benefit by

Correct Answer
verified

Correct Answer
verified
B

Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make than to buy.

Correct Answer
verified

The gains from trade are

Correct Answer
verified

People who provide you with goods and services

Correct Answer
verified

Correct Answer
verified

The gains from specialization and trade are based on absolute advantage.

Correct Answer
verified
False

Adam Smith asserted that a person should never attempt to make at home

Correct Answer
verified

Correct Answer
verified

Figure 3-8 -Refer to Figure 3-8. At which of the following prices would both Chile and Colombia gain from trade with each other?

Correct Answer
verified

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

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

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 and Iceland would not be able to gain from trade if Iceland's opportunity cost of one radio changed to

Correct AnswerverifiedShow Answer

Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-8 -Refer to Figure 3-8. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by

Correct AnswerverifiedShow Answer

Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.

Correct AnswerverifiedTrue

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. Perry has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-7 -Refer to Figure 3-7. The opportunity cost of 1 bowl for Bintu is

Correct AnswerverifiedShow Answer

A country that currently does not trade with other countries could benefit by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make than to buy.

Correct AnswerverifiedShow Answer

The gains from trade are

Correct AnswerverifiedShow Answer

People who provide you with goods and services

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The gains from specialization and trade are based on absolute advantage.

Correct AnswerverifiedFalse

Adam Smith asserted that a person should never attempt to make at home

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-8 -Refer to Figure 3-8. At which of the following prices would both Chile and Colombia gain from trade with each other?

Correct AnswerverifiedShow Answer

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified