Deck 3: Essay

Question 1

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.What is Greg's opportunity cost of producing ice cream? Explain how you derived your answer.

Answer 1

It takes Greg 1 hour to produce a quart of ice cream and 2 hours to produce a cake.So,the opportunity cost of producing a quart of ice cream is 1/2 cake.

Question 2

What does a consumption possibilities frontier represent?

Answer 2

The combinations of output that an economy can consume.

Question 3

Suppose that Venezuela produces beef and oil and it can switch production between each at a constant rate.If the most beef it can produce is 300 million pounds and the most oil it can produce is 50 million barrels,then what is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil?

Answer 3

The opportunity cost of a pound of beef is 50 barrels of oil/300 = 1/6 barrels of oil.
The opportunity cost of a barrel of oil is 300 pounds of beef/50 = 6 pounds of beef.

Question 4

Define absolute advantage.

Question 5

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
Refer to Scenario 3-2.Which country,if either,has an absolute advantage producing broccoli? Defend your answer.

Question 6

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
Refer to Scenario 3-2.Which country,if either,has a comparative advantage producing rice? Defend your answer using the numbers given.

Question 7

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.Is it possible for Greg and Catherine to gain from trade? Defend your answer.

Question 8

Frank can make 20 hot dogs an hour or 10 pints of potato salad an hour.Earnest can make 30 hot dogs an hour or 20 pints of potato salad an hour.Who has the comparative advantage making hot dogs and who has the comparative advantage making potato salad?

Question 9

What does a production possibilities frontier represent?

Question 10

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.What is Catherine's opportunity cost of producing cake? Explain how you derived your answer.

Question 11

Define comparative advantage.

Question 12

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.What is Greg's opportunity cost of producing cake? Explain how you derived your answer.

Question 13

Jennifer takes 2 hours to make a loaf of bread and 1 hour to make a dozen cookies.Janet takes 3 hours to make a loaf of bread and 3/4 hours to make a dozen cookies.Who,if either,has an absolute advantage baking bread? Who,if either,has an absolute advantage making cookies?

Question 14

Charlotte can produce pork and beans and can switch between producing them at a constant rate.If it takes her 10 hours to produce a pound of pork and 5 hours to produce a pound of beans,what is her opportunity cost of pork and what is her opportunity cost of beans?

Question 15

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.Which if any good(s)does Catherine have an absolute advantage producing?

Question 16

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
Refer to Scenario 3-2.Which country,if either,has a comparative advantage producing broccoli? Defend your answer using the numbers given.

Question 17

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
Refer to Scenario 3-2.Which country,if either,has an absolute advantage producing rice? Defend your answer.

Question 18

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.What is Catherine's opportunity cost of producing ice cream? Explain how you derived your answer.

Question 19

Under what conditions is an economy's production possibilities frontier also its consumption possibilities frontier?

Question 20

Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities
Refer to Scenario 3-1.Which if any good(s)does Greg have an absolute advantage producing?

Question 21

If the U.S.could produce 5 televisions per hour of labor and China could produce 3 televisions per hour of labor,would it necessarily follow that the U.S.should specialize in television production?
Explain your answer using the concepts of comparative and or absolute advantage.

Question 22

Tom's opportunity cost of mowing a lawn is 2 loads of laundry.Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry.What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?

Question 23

Scenario 3-2
In country A a worker who works 40 hours can produce 200 pounds of rice or 100 pounds of broccoli.In country B a worker who works 40 hours can produce 160 pounds of rice or 120 pounds of broccoli.
Refer to Scenario 3-2.Give a range of prices in terms of pounds of rice per pound of broccoli at which the two countries would be both be willing to trade.

Question 24

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.Who has a comparative advantage in making muffins?

Question 25

Explain the difference between absolute advantage and comparative advantage.Which is more important in determining trade patterns,absolute advantage or comparative advantage? Why?

Question 26

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.Who has a comparative advantage in making cookies?

Question 27

Country A and country B both produce shirts and shorts.Country B has an absolute advantage producing both shirts and shorts.Is there any condition under which the two countries could gain from trade?

Question 28

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.What is Mary's opportunity cost of one cookie?

Question 29

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.If Mary and Kate trade foods with each other,who will trade away muffins in exchange for cookies?

Question 30

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.What is Kate's opportunity cost of one cookie?

Question 31

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

Question 32

With eight hours of work Elmer can produce 20 pounds of carrots or 15 pounds of peas.With eight hours Bugs can produce 10 pounds of carrots or 7.5 pounds of peas.Can Elmer and Bugs gain from trade? Defend your answer.

Question 33

It takes Heather 1 hour to change the oil in the car and 20 minutes to do the dishes.It takes Zach 1.5 hours to change the oil in the car.For Zach to have a comparative advantage changing the oil it must take him more than ------ minutes to do the dishes.

Question 34

Economists use the term ------ to refer to the ability to produce a good at a lower opportunity cost than another producer.

Question 35

Economists use the term ------ to refer to the ability to produce a good using fewer inputs than another producer.

Question 36

Sally can make 8 cups of soup per hour or 20 crackers per hour.Harry can make 10 cups of soup per hour or 30 crackers per hour.Can Sally and Harry gain from trade? If so,what is the range of prices of crackers for soup at which they would both find trade advantageous?

Question 37

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.What is Kate's opportunity cost of one muffin?

Question 38

Julia can fix a meal in 1 hour,and her opportunity cost of one hour is $50.Jacque can fix the same kind of meal in 2 hours,and his opportunity cost of one hour is $20.Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.

Question 39

The only two countries in the world,Alpha and Omega,face the following production possibilities frontiers.
Alpha's Production Possibilities Frontier
Omega's Production Possibilities Frontier
C:\Users\user\Dropbox\Quizplus Parsing Documents\To Be Parsed\NEW Files\TB2297,Principles of Macroeconomics 8th Edition by N.Gregory Mankiw\TB2297,Principles of Macroeconomics 8th Edition by N.Gregory Mankiw\Images\Sec-All-Short-Answer-and-Essay-Ch-3--5.jpg
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.

Question 40

Figure 3-26
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier
Refer to Figure 3-26.What is Mary's opportunity cost of one muffin?