Deck 3: Interdependence and the Gains From Trade

Question 1

The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good.

Answer 1

True

Question 2

One reason trade benefits both parties is that it allows each to specialise in what they do better.

Answer 2

True

Question 3

Suppose it takes Jean four hours to catch 10 fish and one hour to collect one kilogram of mushrooms.It takes Lee four hours to catch 10 fish and 30 minutes to collect 1 kg of mushrooms.Lee should specialise in catching fish and Jean should specialise in collecting mushrooms.

Answer 3

False

Question 4

If trade is not possible, then each person's production possibility frontier is the same as each person's consumption possibility frontier.

Question 5

The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.

Question 6

It takes Barbara four hours to make a pie and four hours to make a shirt.It takes Gary two hours to make a pie and five hours to make a shirt.Barbara should specialise in making shirts and Gary should specialise in making pies.Then they should trade.

Question 7

Jean grows rice at a higher cost than Lee.Suppose Lee catches fish at a higher cost than Jean.They should trade.

Question 8

Trade is not based on absolute advantage; rather it is based on comparative advantage.

Question 9

Shaquille can score 32 points or produce 12 rebounds in one game.Karl can score three points or produce one rebound in one game.Shaquille has both an absolute and a comparative advantage in both scoring and rebounding.

Question 10

A constant trade-off in the production of two goods implies that the production possibility frontier will be a curve rather than a straight line.

Question 11

Robinson Crusoe can produce 20 coconuts or 10 palm leaves in one day.Friday can produce 25 coconuts or five palm leaves in one day.Both individuals will be made better off through trade if Robinson specialises in producing coconuts and Friday specialises in producing palm leaves.

Question 12

Michael can score 30 points per basketball game and Scottie can score 22 points per game.Michael has an absolute advantage over Scottie in scoring.

Question 13

Suppose Aaron can build a table in three days and clean a house in one hour, while Jack can clean a house in three hours but it only takes him one day to build a table.Jack has an absolute advantage over Aaron.

Question 14

People's motivation to trade comes from the goods or services they expect to get in return.

Question 15

Andy is the greatest ukulele player in the world, but he also has a job as a highly paid executive in a human resources firm.He should quit his job to play ukulele full time.

Question 16

For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Question 17

Rusty can edit two pages in one minute, and can type 80 words in one minute.Emily can edit one page in one minute and can type 100 words in one minute.Rusty has both an absolute and a comparative advantage in editing and Emily has both an absolute and a comparative advantage in typing.

Question 18

If one country can produce all goods more cheaply than another, there is no reason to trade.

Question 19

Two individuals or two nations can benefit from trade even if one country has an absolute advantage over the other in producing all goods.

Question 20

Trade allows a country to pivot outwards its production possibilities frontier.

Question 21

If it takes Australian workers fewer hours to produce every good than it takes Malaysian workers, Australia cannot gain from trade with Malaysia.

Question 22

When parties specialise in the production of goods they have a comparative advantage in, total production is increased and both parties can gain from trade.

Question 23

David Ricardo developed the theory of imports and exports, as we know them today.

Question 24

Adam Smith discusses that countries should be self-sufficient in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Question 25

Comparative advantage will always occur when two parties have different opportunity costs in production.

Question 26

Differences in opportunity cost and comparative advantage allow for gains from trade.

Question 27

Goods produced abroad and sold domestically are called exports and goods produced domestically and sold abroad are called imports.

Question 28

David Ricardo made the statement that 'It is a maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy'.

Question 29

Lee can pick 30 apples in one hour.He can pick 60 kiwifruit in half an hour.The opportunity cost to Lee of picking one apple is four kiwifruit.

Question 30

If a country imports goods from overseas, it will always suffer a reduction in welfare.

Question 31

The principle of absolute advantage explains the gains from trade and why economic interdependence occurs.

Question 32

Adam Smith's book An Inquiry into the Nature and Causes of the Wealth of Nations inspired David Ricardo, a millionaire stockbroker, to become an economist.

Question 33

A person is able to obtain goods at prices that are less than that person's opportunity cost because each person concentrates on the activity for which he or she has the lower opportunity cost.

Question 34

It takes Andy eight hours (including his lunch break) to write a report for the minister or three hours to take his cat to the vet.His opportunity cost of taking his cat to the vet is 2.7 hours.

Question 35

A Korean worker can produce 10 cars per month or grow 1500 kg of wheat per month and an American worker can produce four cars or 1700 kg of rice per month.Korea and the US can both gain if Korea makes more cars and exports them to the US in exchange for imports of increased output of Australian rice.

Question 36

The principle of comparative advantage was developed in Adam Smith's 1817 book Principles of Political Economy and Taxation.

Question 37

The conclusions of Adam Smith and David Ricardo on the gains from trade are no longer valid due to the increase of barriers to trade.

Question 38

The central argument for free trade has changed a lot in the past two centuries.

Question 39

As long as two people have different opportunity costs, each can gain from trade by being able to obtain a good at a price lower than his or her opportunity cost.

Question 40

Mark is a computer company executive, and earns $500 per hour managing the company and promoting its products.His daughter Regan is a high school student, and earns $6 per hour helping her grandmother on the farm.Mark's computer is broken.He can repair it himself in one hour.Regan can repair it in 10 hours.Mark has a comparative advantage in repairing the computer.

Question 41

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-Refer to Table 3-1.For the cattle farmer, the opportunity cost of 1 kg of meat is:

A)five hours of labour
B)one hour of labour
C)1/4 kg of potatoes
D)4 kg of potatoes

Question 42

NARRBEGIN: Table 3-1
Table 3-1

Refer to Graph 3-1.For Robinson Crusoe, the opportunity cost of 1 kg of fish is:

A)2 kg of coconuts
B)1/2 kg of coconuts
C)4 kg of coconuts
D)1/4 kg of coconuts
NARRBEGIN: 3-1
Graph 3-1

These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.

Question 43

NARRBEGIN: Table 3-1
Table 3-1

Refer to Graph 3-1.For Friday, the opportunity cost of 1 kg of coconuts is:

A)2/3 kg of fish
B)3 kg of fish
C)1 kg of fish
D)2 kg of fish

Question 44

Economists' support of trade restrictions is still based largely on the failure of the principle of comparative advantage.

Question 45

In order to have a linear production possibilities frontier (one that is not bowed out), it must be that:

A)there are no trade-offs
B)the trade-off between two goods is constant
C)resources are being used efficiently
D)there is no technological advances occurring

Question 46

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-Refer to Table 3-1.For the potato farmer, the opportunity cost of 1 kg of meat is:

A)eight hours of labour
B)four hours of labour
C)2 kg of potatoes
D)1/2 kg of potatoes

Question 47

In the absence of international importing and exporting:

A)a country's consumption possibilities frontier is always below the production possibilities frontier
B)a country will be able to specialise more in producing goods it is most productive in
C)a country's production possibilities frontier is also its consumption possibilities frontier
D)a country will have access to greater product variety

Question 48

NARRBEGIN: Table 3-1
Table 3-1

Mark can cook dinner in 30 minutes and wash the laundry in 20 minutes while his housemate John can cook dinner in 15 minutes and wash the laundry in 30 minutes.How should they allocate their work?

A)Mark should cook dinner based on his comparative advantage
B)John should cook dinner based on his absolute advantage
C)John should cook dinner based on his comparative advantage
D)Mark should do the laundry based on his absolute advantage

Question 49

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-According to Table 3-1:

A)the cattle farmer has a comparative advantage in potatoes, and the potato farmer has a comparative advantage in meat
B)the cattle farmer has a comparative advantage in both goods, and the potato farmer has a comparative advantage in neither goods
C)the cattle farmer has a comparative advantage in meat, and the potato farmer has a comparative advantage in potatoes
D)the cattle farmer has a comparative advantage in neither goods, and the potato farmer has a comparative advantage in both goods

Question 50

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-Refer to Table 3-1.For the cattle farmer, the opportunity cost of one kg of potatoes is:

A)four hours of labour
B)two hours of labour
C)1/4 kg of meat
D)4 kg of meat

Question 51

NARRBEGIN: Table 3-1
Table 3-1

Refer to Graph 3-1.For Friday, the opportunity cost of 1 kg of fish is:

A)1 kg of coconuts
B)3/2 kg of coconuts
C)1/3 kg of coconuts
D)2 kg of fish

Question 52

A country's consumption possibilities frontier can be moved outside its production possibilities frontier:

A)by producing a greater variety of goods and services
B)by allocating resources differently
C)through trade
D)by lowering unemployment in the country

Question 53

A butcher can produce only hamburgers, and a farmer can produce only potato chips.The butcher and the farmer both like both foods.They:

A)cannot gain from trade
B)could gain from trade under certain circumstances, but not always
C)could gain from trade because each would enjoy a greater variety of food
D)could gain from trade only if each were indifferent between hamburgers and potato chips

Question 54

NARRBEGIN: Table 3-1
Table 3-1

Refer to Graph 3-1.For Robinson Crusoe, the opportunity cost of 1 kg of coconuts is:

A)2 kg of fish
B)1/2 kg of fish
C)4 kg of fish
D)1/4 kg of fish

Question 55

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-According to Table 3-1:

A)the potato farmer has an absolute advantage in meat, and the cattle farmer has a comparative advantage in meat
B)the potato farmer has an absolute advantage in potatoes, and the cattle farmer has a comparative advantage in potatoes
C)the potato farmer has an absolute advantage in neither goods, and the cattle farmer has a comparative advantage in potatoes
D)the potato farmer has an absolute advantage in neither goods, and the cattle farmer has a comparative advantage in meat

Question 56

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-According to Table 3-1:

A)the cattle farmer has an absolute advantage in both goods, and the potato farmer has a comparative advantage in meat
B)the cattle farmer has an absolute advantage in meat, and the potato farmer has a comparative advantage in potatoes
C)the cattle farmer has an absolute advantage in meat, and the potato farmer has a comparative advantage in neither goods
D)the cattle farmer has an absolute advantage in both goods, and the potato farmer has a comparative advantage in potatoes

Question 57

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-Refer to Table 3-1.For the potato farmer, the opportunity cost of 1 kg of potatoes is:

A)eight hours of labour
B)1/2 kg of meat
C)2 kg of meat
D)four hours of labour

Question 58

The reason most people provide you with goods and services is because:

A)their beliefs make them feel charitable to you
B)they want to be your friend
C)they will receive something they want in return
D)they aren't as good at bargaining as you are

Question 59

Table 3-1
$\begin{array}{|l|c|c|c|c|}\hline&\text { Labour hours needed to make } 1 \mathrm{~kg} \text { of: }&&\text { Kgs produced in } 20 \text { hours: }\\\hline & \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \\\hline \text { Potato farmer } & 10 & 5 & 2 & 4 \\\hline \text { Zattle farmer } & 4 & 1 & 5 & 20 \\\hline\end{array}$

-According to Table 3-1:

A)the potato farmer has an absolute advantage in meat, and the cattle farmer has an absolute advantage in potatoes
B)the potato farmer has an absolute advantage in potatoes, and the cattle farmer has an absolute advantage in meat
C)the potato farmer has an absolute advantage in meat, and the cattle farmer has an absolute advantage in meat
D)the potato farmer has an absolute advantage in neither goods, and the cattle farmer has an absolute advantage in both goods

Question 60

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Question 61

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
Refer to Graph 3-2.The opportunity cost of one doughnut for Jim is:

A)three coffees
B)two coffees
C)1/2 coffee
D)1/3 coffee

Question 62

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
Refer to Graph 3-2.The opportunity cost of one coffee for Jim is:

A)three doughnuts
B)two doughnuts
C)1/2 doughnut
D)1/3 doughnut

Question 63

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-According to Table 3-2:

A)Lee has an absolute advantage in neither goods, and John has an absolute advantage in both goods
B)Lee has an absolute advantage in neither goods, and John has an absolute advantage in butter
C)Lee has an absolute advantage in rice, and John has an absolute advantage in butter
D)Lee has an absolute advantage in rice, and John has an absolute advantage in both goods

Question 64

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
According to Graph 3-2:

A)Amy has a comparative advantage in doughnuts, and Jim has a comparative advantage in coffee
B)Amy has a comparative advantage in both goods, and Jim has a comparative advantage in neither goods
C)Amy has a comparative advantage in coffee, and Jim has a comparative advantage in doughnuts
D)Amy has a comparative advantage in neither goods, and Jim has a comparative advantage in both goods

Question 65

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
Refer to Graph 3-2.The opportunity cost of one doughnut for Amy is:

A)three coffees
B)two coffees
C)1/2 coffee
D)1/3 coffee

Question 66

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-According to Table 3-2:

A)Lee has an absolute advantage in neither goods, and John has a comparative advantage in butter
B)Lee has an absolute advantage in rice, and John has a comparative advantage in butter
C)Lee has an absolute advantage in rice, and John has a comparative advantage in neither goods
D)Lee has an absolute advantage in neither goods, and John has a comparative advantage in rice

Question 67

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-Refer to Table 3-2.For John the opportunity cost of one kg of rice:

A)3/4 kg of butter
B)3/2 kg of butter
C)4/3 kg of butter
D)2/3 kg of butter

Question 68

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-According to Table 3-2:

A)Lee and John both could benefit by Lee specialising in butter, and John specialising in rice
B)Lee and John both could benefit by Lee specialising in butter, and John specialising in butter
C)Lee and John both could benefit by Lee specialising in rice, and John specialising in butter
D)Lee and John both could benefit by Lee specialising in rice, and John specialising in rice

Question 69

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
Refer to Graph 3-2.The opportunity cost of one coffee for Amy is:

A)three doughnuts
B)two doughnuts
C)1/2 doughnut
D)1/3 doughnut

Question 70

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-According to Table 3-2:

A)Lee has a comparative advantage in rice, and John has an absolute advantage in butter
B)Lee has a comparative advantage in butter, and John has an absolute advantage in rice
C)Lee has a comparative advantage in rice, and John has an absolute advantage in neither goods
D)Lee has a comparative advantage in butter, and John has an absolute advantage in neither goods

Question 71

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
According to Graph 3-2:

A)Amy has an absolute advantage in both goods, and Jim has an absolute advantage in neither goods
B)Amy has an absolute advantage in neither goods, and Jim has an absolute advantage in both goods
C)Amy has an absolute advantage in coffee, and Jim has an absolute advantage in doughnuts
D)Amy has an absolute advantage in doughnuts, and Jim has an absolute advantage in coffee

Question 72

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-According to Table 3-2:

A)Lee has a comparative advantage in butter, and John has a comparative advantage in rice
B)Lee has a comparative advantage in butter, and John has a comparative advantage in butter
C)Lee has a comparative advantage in rice, and John has a comparative advantage in butter
D)Lee has a comparative advantage in rice, and John has a comparative advantage in rice

Question 73

NARRBEGIN: Table 3-1
Table 3-1

According to Graph 3-1:

A)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in both goods
B)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in coconuts
C)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in neither goods
D)Robinson Crusoe has a comparative advantage in coconuts, and Friday has an absolute advantage in fish

Question 74

NARRBEGIN: 3-2
Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
According to Graph 3-2:

A)Amy has a comparative advantage in doughnuts, and Jim has an absolute advantage in coffee
B)Amy has a comparative advantage in doughnuts, and Jim has an absolute advantage in neither goods
C)Amy has a comparative advantage in coffee, and Jim has an absolute advantage in doughnuts
D)Amy has a comparative advantage in coffee, and Jim has an absolute advantage in neither goods

Question 75

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-Refer to Table 3-2.For Lee the opportunity cost of 1 kg of rice is:

A)4/3 kg of butter
B)3/4 kg of butter
C)2/3 kg of butter
D)3/2 kg of butter

Question 76

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-Refer to Table 3-2.The opportunity cost of 1 kg of butter for Lee is:

A)3/2 kg of rice
B)4/3 kg of rice
C)3/4 kg of rice
D)2/3 kg of rice

Question 77

NARRBEGIN: Table 3-1
Table 3-1

According to Graph 3-1:

A)Robinson Crusoe has an absolute advantage in coconuts, and Friday has a comparative advantage in fish
B)Robinson Crusoe has an absolute advantage in both goods, and Friday has a comparative advantage in coconuts
C)Robinson Crusoe has an absolute advantage in fish, and Friday has a comparative advantage in coconuts
D)Robinson Crusoe has an absolute advantage in neither goods, and Friday has a comparative advantage in fish

Question 78

NARRBEGIN: Table 3-1
Table 3-1

According to Graph 3-1:

A)Robinson Crusoe has an absolute advantage in fish, and Friday has an absolute advantage in coconuts
B)Robinson Crusoe has an absolute advantage in coconuts, and Friday has an absolute advantage in fish
C)Robinson Crusoe has an absolute advantage in neither goods, and Friday has an absolute advantage in both goods
D)Robinson Crusoe has an absolute advantage in both goods, and Friday has an absolute advantage in neither goods

Question 79

Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\\\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \\\hline \text { Lee } & 6 & 10 & 15 & 4 \\\hline \text { John } & 3 & 20 & 15 & 4\\\hline\end{array}$

-Refer to Table 3-2.The opportunity cost of 1 kg of butter for John is:

A)3/2 kg of rice
B)4/3 kg of rice
C)3/4 kg of rice
D)2/3 kg of rice

Question 80

NARRBEGIN: Table 3-1
Table 3-1

According to Graph 3-1:

A)Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in coconuts
B)Robinson Crusoe has a comparative advantage in coconuts, and Friday has a comparative advantage in fish
C)Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in fish
D)Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in neither goods