Deck 3: Interdependence and the Gains From Trade

Question 1

The difference between production possibilities frontiers that are bowed out and those that are straight lines is that

A)bowed-out production possibilities frontiers apply to economies that face tradeoffs, whereas straight-line production possibilities frontiers apply to economies that do not face tradeoffs.
B)bowed-out production possibilities frontiers apply to economies in which resources are not specialized, whereas straight-line production possibilities frontiers apply to economies in which resources are specialized.
C)bowed-out production possibilities frontiers illustrate increasing opportunity cost, whereas straight-line production possibilities frontiers illustrate constant opportunity cost.
D)straight-line production possibilities frontiers illustrate real-world conditions, whereas bowed-out production possibilities frontiers illustrate more simplistic assumptions.

Answer 1

C

Question 2

Table 3-1

Refer to Table 3-1.The opportunity cost of 1 pound of potatoes for the rancher is

A)5 hours of labor.
B)4 hours of labor.
C)5/4 pounds of meat.
D)4/5 pound of meat.

Answer 2

C

Question 3

Consider a shoemaker and a vegetable farmer.Potentially,trade could benefit both individuals if

A)the shoemaker can produce only shoes and the vegetable farmer can produce only vegetables.
B)the shoemaker is capable of growing vegetables, but he is not very good at it.
C)the vegetable farmer is better at growing vegetables and better at making shoes than the shoemaker.
D)All of the above are correct.

Answer 3

D

Question 4

Which of the following statements is not correct?

A)Trade allows for specialization.
B)Trade has the potential to benefit all nations.
C)Trade allows nations to consume outside of their production possibilities curves.
D)Absolute advantage is the driving force of specialization.

Question 5

Without trade,

A)a country is better off because it will have to learn to be self-sufficient without trade.
B)a country's production possibilities frontier is also its consumption possibilities frontier.
C)a country can still benefit from international specialization.
D)interdependence is more extensive than it would be with trade.

Question 6

A production possibilities frontier will be a straight line if

A)increasing the production of one good by x units entails no opportunity cost in terms of the other good.
B)increasing the production of one good by x units entails a constant opportunity cost in terms of the other good.
C)the economy is producing efficiently.
D)the economy is engaged in trade with at least one other economy.

Question 7

When an economist points out that you and millions of other people are interdependent,he or she is referring to the fact that we all

A)rely upon government to provide us with the basic necessities of life.
B)rely upon one another for the goods and services we all consume.
C)have similar tastes and abilities.
D)are concerned about one another's well-being.

Question 8

Table 3-1

Refer to Table 3-1.The opportunity cost of 1 pound of meat for the farmer is

A)1/4 hour of labor.
B)4 hours of labor.
C)4 pounds of potatoes.
D)1/4 pound of potatoes.

Question 9

Shannon bakes cookies and Justin grows vegetables.In which of the following cases is it impossible for both Shannon and Justin to benefit from trade?

A)Shannon does not like vegetables and Justin does not like cookies.
B)Shannon is better than Justin at baking cookies and Justin is better than Shannon at growing vegetables.
C)Justin is better than Shannon at baking cookies and at growing vegetables.
D)All of the above are correct.

Question 10

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

A)the country's technology is superior to the technologies of other countries.
B)the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries.
C)the country engages in trade.
D)All of the above are correct.

Question 11

The production possibilities frontier is a downward-sloping straight line when

A)it is possible to switch between one good and the other good at a constant rate.
B)there is no tradeoff involved in switching between one good and the other good.
C)the same amount of time is required to produce a unit of one good as is required to produce a unit of the other good.
D)the person for whom the frontier is drawn wishes to consume equal amounts of the two goods.

Question 12

Table 3-1

Refer to Table 3-1.The opportunity cost of 1 pound of meat for the rancher is

A)4 hours of labor.
B)5 hours of labor.
C)4/5 pounds of potatoes.
D)5/4 pounds of potatoes.

Question 13

People generally choose to depend upon others for goods and services.Economists view this interdependence as

A)a good thing, since it fosters friendships and bonds that otherwise would never develop.
B)a good thing, since it allows people to consume more goods and services than they would otherwise be able to consume.
C)a bad thing, since self-sufficiency may become necessary in the future.
D)a bad thing, since interdependence reduces people's self-esteem and causes various social problems.

Question 14

Regan grows flowers and makes ceramic vases.Jayson also grows flowers and makes vases,but Regan is better at producing both.In this case,trade could

A)benefit both Jayson and Regan.
B)benefit Jayson, but not Regan.
C)benefit Regan, but not Jayson.
D)benefit neither Jayson nor Regan.

Question 15

Table 3-1

Refer to Table 3-1.The opportunity cost of 1 pound of potatoes for the farmer is

A)8 hours of labor.
B)2 hours of labor.
C)4 pounds of meat.
D)1/4 pound of meat.

Question 16

Ben bakes bread and Shawna knits sweaters.Ben likes to eat bread and wear sweaters,and the same is true for Shawna.In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

A)Ben cannot knit sweaters and Shawna cannot bake bread.
B)Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters.
C)Ben is better than Shawna at baking bread and at knitting sweaters.
D)None of the above is correct.

Question 17

People who provide you with goods and services

A)are acting out of generosity.
B)do so because they have no other choice.
C)do so because they get something in return.
D)are required to do so by government.

Question 18

Table 3-1

Refer to Table 3-1.The rancher has an absolute advantage in

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

Question 19

Table 3-1

Refer to Table 3-1.The farmer has an absolute advantage in

A)meat, and the rancher has an absolute advantage in potatoes.
B)potatoes, and the rancher has an absolute advantage in meat.
C)meat, and the rancher has an absolute advantage in meat.
D)neither good, and the rancher has an absolute advantage in both goods.

Question 20

If labor in Mexico is less productive than labor in the United States in all areas of production,

A)neither nation can benefit from trade.
B)Mexico can benefit from trade but the United States cannot.
C)the United States will have a comparative advantage relative to Mexico in the production of all goods.
D)both Mexico and the United States still can benefit from trade.

Question 21

Figure 3-1

Refer to Figure 3-1.The opportunity cost of 2 bushels of corn for Cliff is

A)2 bushels of wheat.
B)3 bushels of wheat.
C)6 bushels of wheat.
D)12 bushels of wheat.

Question 22

Figure 3-1

Refer to Figure 3-1.Assume Cliff and Paul were both producing wheat and corn,and each person was dividing his time equally between the two.Then each decides to specialize in the product in which he has a comparative advantage.Furthermore,they agree to trade 3 bushels of wheat for 3 bushels of corn.As a result of these new arrangements,Cliff is able to consume

A)4 bushels of wheat and 3 bushels of corn, and this point lies on Cliff's production possibilities frontier.
B)3 bushels of wheat and 3 bushels of corn, and this point lies outside of Cliff's production possibilities frontier.
C)3 bushels of wheat and 2 bushels of corn, and this point lies on Cliff's production possibilities frontier.
D)4 bushels of wheat and 3 bushels of corn, and this point lies outside of Cliff's production possibilities frontier.

Question 23

Table 3-1

Refer to Table 3-1.The rancher has a comparative advantage in

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

Question 24

Figure 3-2

Refer to Figure 3-2.For Jerry,the opportunity cost of 1 pound of cones is

A)1/3 pound of ice cream.
B)2/3 pound of ice cream.
C)3/2 pounds of ice cream.
D)2 pounds of ice cream.

Question 25

Figure 3-1

Refer to Figure 3-1.Assume both Paul and Cliff divide their time equally between the production of corn and wheat,and they do not trade.If they are the only producers of wheat and corn,then total production of wheat and corn is

A)8 bushels of wheat and 7 bushels of corn.
B)7 bushels of wheat and 6 bushels of corn.
C)6 bushels of wheat and 8 bushels of corn.
D)7 bushels of wheat and 7 bushels of corn.

Question 26

Figure 3-1

Refer to Figure 3-1.The opportunity cost of 1 bushel of corn is

A)4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Paul has the comparative advantage in growing corn.
B)4/5 bushel of wheat for Paul and 3/2 bushels of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn.
C)5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Paul has the comparative advantage in growing corn.
D)5/4 bushels of wheat for Paul and 2/3 bushel of wheat for Cliff; thus, Cliff has the comparative advantage in growing corn.

Question 27

Figure 3-1

Refer to Figure 3-1.The opportunity cost of 1 bushel of wheat for Cliff is

A)1/3 bushel of corn.
B)2/3 bushel of corn.
C)1 bushel of corn.
D)3/2 bushels of corn.

Question 28

Figure 3-1

Refer to Figure 3-1.Which of the following statements is correct?

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.

Question 29

Table 3-1

Refer to Table 3-1.The farmer and the rancher both could benefit if the farmer were to specialize in

A)meat and the rancher were to specialize in potatoes.
B)potatoes and the rancher were to specialize in meat.
C)neither good and the rancher were to specialize in both goods.
D)none of the above; they cannot both benefit by specialization and trade.

Question 30

Figure 3-1

Refer to Figure 3-1.If Paul divides his time equally between corn and wheat,he will be able to produce

A)2 bushels of wheat and 2 bushels of corn.
B)3 bushels of wheat and 3 bushels of corn.
C)4 bushels of wheat and 5 bushels of corn.
D)4 bushels of wheat and 6 bushels of corn.

Question 31

Figure 3-2

Refer to Figure 3-2.For Ben,the opportunity cost of 1 pound of cones is

A)1/4 pound of ice cream.
B)1/2 pound of ice cream.
C)2 pounds of ice cream.
D)4 pounds of ice cream.

Question 32

Figure 3-1

Refer to Figure 3-1.Assume Cliff and Paul were both producing wheat and corn,and each person was dividing his time equally between the two.Then each decides to specialize in the product in which he has a comparative advantage.As a result of this change,total production of corn would

A)increase by 1 bushel.
B)increase by 3 bushels.
C)increase by 5 bushels.
D)decrease by 2 bushels.

Question 33

Table 3-1

Refer to Table 3-1.The farmer has an absolute advantage in

A)potatoes, and the rancher has a comparative advantage in meat.
B)meat, and the rancher has a comparative advantage in potatoes.
C)neither good, and the rancher has a comparative advantage in potatoes.
D)neither good, and the rancher has a comparative advantage in meat.

Question 34

Figure 3-1

Refer to Figure 3-1.Suppose Cliff must work 5 hours to produce each bushel of corn.Then Cliff

A)must work 3 1/3 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 2/3 bushel of wheat.
B)must work 3 1/3 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 1.5 bushels of wheat.
C)must work 7.5 to produce each bushel of wheat, and his opportunity cost of a bushel of corn is approximately 2/3 bushel of wheat.
D)must work 7.5 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 1.5 bushels of wheat.

Question 35

Figure 3-2

Refer to Figure 3-2.For Jerry,the opportunity cost of 1 pound of ice cream is

A)1/3 pound of cones.
B)2/3 pound of cones.
C)3/2 pounds of cones.
D)2 pounds of cones.

Question 36

Figure 3-1

Refer to Figure 3-1.Suppose Cliff must work 5 hours to produce each bushel of corn.Then Cliff's production possibilities frontier is based on how many hours of work?

A)0.2 hours
B)2.5 hours
C)15 hours
D)20 hours

Question 37

Figure 3-1

Refer to Figure 3-1.Suppose Paul must work 2 hours to produce each bushel of corn.Then Paul

A)must work 0.4 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 0.8 bushels of wheat.
B)must work 0.4 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 1.25 bushels of wheat.
C)must work 2.5 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 0.8 bushels of wheat.
D)must work 2.5 hours to produce each bushel of wheat, and his opportunity cost of a bushel of corn is 1.25 bushels of wheat.

Question 38

Figure 3-1

Refer to Figure 3-1.Which of the following statements is correct?

A)Paul has a comparative advantage in both wheat and corn.
B)Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn.
C)Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn.
D)Cliff has a comparative advantage in both wheat and corn.

Question 39

Figure 3-2

Refer to Figure 3-2.For Ben,the opportunity cost of 1 pound of ice cream is

A)1/14 pound of cones.
B)1/2 pound of cones.
C)2 pounds of cones.
D)4 pound of cones.

Question 40

Figure 3-1

Refer to Figure 3-1.Suppose Paul must work 2 hours to produce each bushel of corn.Then Paul's production possibilities frontier is based on how many hours of work?

A)0.2 hours
B)5 hours
C)10 hours
D)20 hours

Question 41

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.For Helen,the opportunity cost of 1 dress is

A)1/5 quilt.
B)1/4 quilt.
C)2 quilts.
D)5 quilts.

Question 42

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.We could use the information in the table to draw a production possibilities frontier for Helen and a second production possibilities frontier for Carolyn.If we were to do this,measuring dresses along the horizontal axis,then

A)the slope of Helen's production possibilities frontier would be -0.2 and the slope of Carolyn's production possibilities frontier would be -0.5.
B)the slope of Helen's production possibilities frontier would be -5 and the slope of Carolyn's production possibilities frontier would be -2.
C)the slope of Helen's production possibilities frontier would be 0.2 and the slope of Carolyn's production possibilities frontier would be 0.5.
D)the slope of Helen's production possibilities frontier would be 5 and the slope of Carolyn's production possibilities frontier would be 2.

Question 43

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.For Carolyn,the opportunity cost of 1 quilt is

A)0.5 dresses.
B)1 dress.
C)2 dresses.
D)3 dresses.

Question 44

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.For Carolyn,the opportunity cost of 1 dress is

A)5 quilts.
B)4 quilts.
C)1/2 quilt.
D)1/10 quilt.

Question 45

Figure 3-2

Refer to Figure 3-2.Originally,Ben was producing at his point A and Jerry was producing at his point A.Then,each person decided to specialize in the product in which he has a comparative advantage.Furthermore,they agreed to trade 4 pounds of cones for 2 pounds of ice cream.As a result of these new arrangements,the gains from trade relative to the original situation are as follows:

A)1 additional pound of cones for Ben and 1 additional pound of ice cream for Jerry.
B)1 additional pound of ice cream for Ben and 1 additional pound of cones for Jerry.
C)2 additional pounds of ice cream for Ben and 2 additional pounds of cones for Jerry.
D)2 additional pounds of ice cream for Ben and 1 additional pound of cones for Jerry.

Question 46

Figure 3-2

Refer to Figure 3-2.Ben has a comparative advantage in

A)cones and Jerry has a comparative advantage in ice cream.
B)ice cream and Jerry has a comparative advantage in cones.
C)neither good and Jerry has a comparative advantage in both goods.
D)both goods and Jerry has a comparative advantage in neither good.

Question 47

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.Helen has an absolute advantage in

A)dresses and Carolyn has an absolute advantage in quilts.
B)quilts and Carolyn has a comparative advantage in dresses.
C)both goods and Carolyn has a comparative advantage in quilts.
D)neither good and Carolyn has a comparative advantage in dresses.

Question 48

Figure 3-3

Refer to Figure 3-3.The opportunity cost of 1 pair of tap shoes for Ginger is

A)1/4 pair of ballet slippers.
B)1/3 pair of ballet slippers.
C)3/4 pair of ballet slippers.
D)4/3 pairs of ballet slippers.

Question 49

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.Helen has a comparative advantage in

A)dresses and Carolyn has a comparative advantage in quilts.
B)quilts and Carolyn has a comparative advantage in dresses.
C)neither good and Carolyn has a comparative advantage in both goods.
D)both goods and Carolyn has a comparative advantage in neither good.

Question 50

Figure 3-2

Refer to Figure 3-2.Ben has an absolute advantage in

A)ice cream and Jerry has an absolute advantage in cones.
B)cones and Jerry has an absolute advantage in ice cream.
C)neither good and Jerry has an absolute advantage in both goods.
D)both goods and Jerry has an absolute advantage in neither good.

Question 51

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.For Helen,the opportunity cost of 1 quilt is

A)0.2 dresses.
B)2 dresses.
C)3.5 dresses.
D)5 dresses.

Question 52

Figure 3-2

Refer to Figure 3-2.Suppose Ben's production possibilities frontier is based on 4 hours of work and the same true is for Jerry's.Then

A)Ben requires 2 hours to produce a pound of ice cream and Jerry requires 40 minutes to produce a pound of cones.
B)if Ben worked 1 hour producing ice cream and 3 hours producing cones, and if Jerry worked 3 hours producing ice cream and 1 hour producing cones, total output would be
3)5 pounds of ice cream and 7.5 pounds of cones.
C)if each person worked 4 hours, specializing in the activity in which he has a comparative advantage, total output would be 4 pounds of ice cream and 8 pounds of cones.
D)All of the above are correct.

Question 53

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.We could use the information in the table to draw a production possibilities frontier for Helen and a second production possibilities frontier for Carolyn.If we were to do this,measuring quilts along the horizontal axis,then

A)the slope of Helen's production possibilities frontier would be -0.2 and the slope of Carolyn's production possibilities frontier would be -0.5.
B)the slope of Helen's production possibilities frontier would be -5 and the slope of Carolyn's production possibilities frontier would be -2.
C)the slope of Helen's production possibilities frontier would be 0.2 and the slope of Carolyn's production possibilities frontier would be 0.5.
D)the slope of Helen's production possibilities frontier would be 5 and the slope of Carolyn's production possibilities frontier would be 2.

Question 54

Figure 3-2

Refer to Figure 3-2.Ben has an absolute advantage in

A)neither good and he has a comparative advantage in neither good.
B)neither good and he has a comparative advantage in cones.
C)cones and he has a comparative advantage in cones.
D)ice cream and he has a comparative advantage in ice cream.

Question 55

Figure 3-2

Refer to Figure 3-2.Suppose Ben's production possibilities frontier is based on 4 hours of work.How much time does Ben require to produce 1 pound of ice cream?

A)1/2 hour
B)1 hour
C)2 hours
D)The answer cannot be determined from the given information.

Question 56

For the following question(s), use the accompanying table.
Table 3-2

Refer to Table 3-2.Helen has a comparative advantage in

A)quilts and Carolyn has an absolute advantage in neither good.
B)dresses and Carolyn has an absolute advantage in quilts.
C)quilts and Carolyn has an absolute advantage in dresses.
D)dresses and Carolyn has an absolute advantage in neither good.

Question 57

Figure 3-3

Refer to Figure 3-3.The opportunity cost of 1 pair of tap shoes for Fred is

A)1/3 pair of ballet slippers.
B)1/5 pair of ballet slippers.
C)3/5 pair of ballet slippers.
D)5/3 pairs of ballet slippers.

Question 58

Figure 3-2

Refer to Figure 3-2.Suppose Ben and Jerry have both decided to produce at point A on their respective production possibilities frontiers.We know that

A)neither Ben's well-being nor Jerry's well-being could be improved as a result of trade between the two.
B)trade between the two could benefit Ben but not Jerry.
C)trade between the two could benefit Jerry but not Ben.
D)Ben and Jerry are both allocating 1/2 of their time to the production of each good.

Question 59

Figure 3-2

Refer to Figure 3-2.Jerry has an absolute advantage in

A)both goods and Ben has a comparative advantage in ice cream.
B)neither good and Ben has a comparative advantage in cones.
C)ice cream and Ben has a comparative advantage in ice cream.
D)ice cream and Ben has a comparative advantage in cones.

Question 60

Figure 3-2

Refer to Figure 3-2.Suppose Jerry's production possibilities frontier is based on 4 hours of work.Jerry requires

A)1/4 hour to produce 1 pound of ice cream and 3/8 hour to produce 1 pound of cones.
B)1/2 hour to produce 1 pound of ice cream and 3/4 hour to produce 1 pound of cones.
C)1 hour to produce 1 pound of ice cream and 2/3 hour to produce 1 pound of cones.
D)1 hour to produce 1 pound of ice cream and 3/2 hours to produce 1 pound of cones.

Question 61

A farmer has the ability to grow either corn or cotton or some combination of the two.Given no other information,it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

A)is equal to 1.
B)is greater than 1 but less than 2.
C)is equal to 2.
D)Not enough information is given to make this determination.

Question 62

Figure 3-3

Refer to Figure 3-3.Suppose Fred specializes in the good in which he has a comparative advantage,and Ginger specializes in the good in which she has a comparative advantage.Then

A)total production of ballet slippers would be 6 and total production of tap shoes would be 6.
B)total production of ballet slippers would be 8 and total production of tap shoes would be 6.
C)total production of ballet slippers would be 8 and total production of tap shoes would be 8.
D)total production of ballet slippers would be 8 and total production of tap shoes would be 10.

Question 63

Figure 3-3

Refer to Figure 3-3.The opportunity cost of 1 pair of ballet slippers for Ginger is

A)1/4 pair of tap shoes.
B)1/3 pair of tap shoes.
C)3/4 pair of tap shoes.
D)4/3 pairs of tap shoes.

Question 64

Figure 3-3

Refer to Figure 3-3.Suppose Fred spends half of his time producing ballet slippers and the other half of his time producing tap shoes.Ginger divides her time the same way.Then

A)total production of ballet slippers would be 7 and total production of tap shoes would be 8.
B)total production of ballet slippers would be 8 and total production of tap shoes would be 8.
C)total production of ballet slippers would be 9 and total production of tap shoes would be 6.
D)total production of ballet slippers would be 10 and total production of tap shoes would be 8.

Question 65

Figure 3-3

Refer to Figure 3-3.The opportunity cost of 1 pair of ballet slippers for Fred is

A)1/3 pair of tap shoes.
B)1/5 pair of tap shoes.
C)3/5 pair of tap shoes.
D)5/3 pairs of tap shoes.

Question 66

Figure 3-3

Refer to Figure 3-3.Ginger has a comparative advantage in

A)tap shoes and Fred has a comparative advantage in ballet slippers.
B)both goods and Fred has a comparative advantage in neither good.
C)ballet slippers and Fred has a comparative advantage in tap shoes.
D)neither good and Fred has a comparative advantage in both goods.

Question 67

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

A)if he devotes all of his available resources to watermelon production 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)All of the above are correct.

Question 68

Figure 3-3

Refer to Figure 3-3.Ginger has an absolute advantage in

A)tap shoes and Fred has a comparative advantage in ballet slippers.
B)both goods and Fred has a comparative advantage in neither good.
C)ballet slippers and Fred has a comparative advantage in tap shoes.
D)neither good and Fred has a comparative advantage in both goods.

Question 69

Table 3-3

Refer to Table 3-3.The opportunity cost of 1 basket for Missouri is

A)1/4 birdhouse.
B)1/2 birdhouse.
C)2 birdhouses.
D)2 2/3 birdhouses.

Question 70

Suppose a gardener produces both green beans and corn in her garden.If she must give up 14 bushels of corn to get 5 bushels of green beans,then her opportunity cost of 1 bushel of green beans is

A)0.36 bushel of corn.
B)2.4 bushels of corn.
C)2.8 bushels of corn.
D)70 bushels of corn.

Question 71

Figure 3-3

Refer to Figure 3-3.Which of the following statements is correct?

A)Fred sacrifices 1 2/3 ballet slippers to produce 1 tap shoe; Ginger sacrifices 3/4 of a ballet slipper to produce 1 tap shoe; therefore, Fred has a comparative advantage in producing tap shoes.
B)Fred sacrifices 3/5 of a ballet slipper to produce 1 tap shoe; Ginger sacrifices 1 1/3 ballet slippers to produce 1 tap shoe; therefore, Fred has an absolute advantage in producing tap shoes.
C)Fred requires 4 hours to produce a tap shoe; Ginger requires 6 2/3 hours to produce a tap shoe; therefore, Fred has a comparative advantage in producing tap shoes.
D)Fred requires 4 hours to produce a tap shoe; Ginger requires 6 2/3 hours to produce a tap shoe; therefore, Fred has an absolute advantage in producing tap shoes.

Question 72

Suppose a gardener produces both green beans and corn in her garden.If the opportunity cost of one bushel of corn is 3/5 bushel of green beans,then the opportunity cost of 1 bushel of green beans is

A)5/3 bushels of corn.
B)2/5 bushel of corn.
C)5/2 bushels of corn.
D)8/5 bushels of corn.

Question 73

Figure 3-3

Refer to Figure 3-3.Originally,Fred was spending half of his time producing tap shoes and the other half of his time producing ballet slippers;Ginger was dividing her time the same way.Then,Fred began spending all of his time producing the good in which he has a comparative advantage,and Ginger began spending all of her time producing the good in which she has a comparative advantage.As a result,

A)total output of ballet slippers decreases by 1 and total output of tap shoes increases by 3.
B)total output of ballet slippers increases by 1 and total output of tap shoes increases by 2.
C)total output of ballet slippers increases by 2 and total output of tap shoes increases by 1.
D)total output of ballet slippers remains constant and total output of tap shoes increases by 2.

Question 74

Table 3-3

Refer to Table 3-3.The opportunity cost of 1 basket for Montana is

A)1/3 birdhouse.
B)1 birdhouse.
C)3 birdhouses.
D)4 birdhouses.

Question 75

Figure 3-3

Refer to Figure 3-3.Fred would incur an opportunity cost of 3 ballet slippers if he

A)increased his production of tap shoes by 4.
B)increased his production of tap shoes by 5.
C)decreased his production of tap shoes by 4.
D)increased the time he spends on the two activities from 40 hours to 50 hours.

Question 76

Figure 3-3

Refer to Figure 3-3.Ginger has an absolute advantage in

A)ballet slippers and Fred has an absolute advantage in tap shoes.
B)tap shoes and Fred has an absolute advantage in ballet slippers.
C)neither good and Fred has an absolute advantage in both goods.
D)both goods and Fred has an absolute advantage in neither good.

Question 77

If Shawn can produce more donuts in one day than Sue can produce in one day,then

A)Shawn has a comparative advantage in the production of donuts.
B)Sue has a comparative advantage in the production of donuts.
C)Shawn has an absolute advantage in the production of donuts.
D)Shawn should produce donuts and Sue should spend her time on a different activity.

Question 78

If Shawn can produce donuts at a lower opportunity cost than Sue,then

A)Shawn has a comparative advantage in the production of donuts.
B)Sue has a comparative advantage in the production of donuts.
C)Shawn should not produce donuts.
D)Shawn is capable of producing more donuts than Sue in a given amount of time.

Question 79

Figure 3-3

Refer to Figure 3-3.How long does it take Fred to make one ballet slipper?

A)4 hours
B)6 hours
C)6 2/3 hours
D)7 1/2 hours

Question 80

Figure 3-3

Refer to Figure 3-3.In order to maximize total output,

A)Ginger should specialize in tap shoes and Fred should specialize in ballet slippers.
B)Ginger should specialize in both goods and Fred should specialize in neither good.
C)Ginger should specialize in ballet slippers and Fred should specialize in tap shoes.
D)Ginger should specialize in neither good and Fred should specialize in both goods.