Question 1

Table 3-2&#10;Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.  &#10;Refer to Table 3-2.Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?&#10;A)  &#10;B)  &#10;C)  &#10;D)

Accepted Answer

To find Aruba's production possibilities frontier, we need to plot the points where Aruba can produce either coolers or radios using the 100 labor hours available. From Table 3-2, we can see that when Aruba produces only coolers, they can produce 20 units using all 100 labor hours. When they produce only radios, they can produce 50 units using all 100 labor hours.

Plotting these points on a graph and connecting them with a straight line gives us Aruba's production possibilities frontier. The correct graph is shown in choice C.

Question 2

Table 3-4&#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.  &#10;Refer to Table 3-4.Which of the following points would be on Shantala's production possibilities frontier,based on a 40-hour week?&#10;A)(120 cellular phones programmed,250 cellular phones tested)&#10;B)(180 cellular phones programmed,150 cellular phones tested)&#10;C)(240 cellular phones programmed,600 cellular phones tested)&#10;D)More than one of the above would be on Shantala's production possibilities frontier.

Accepted Answer

Based on the table, if Shantala works 40 hours a week, she can program 180 cellular phones or test 150 cellular phones. Therefore, point B on the graph, which represents 180 programmed and 150 tested phones, would be on her production possibilities frontier.

Question 3

Assume for Namibia that the opportunity cost of each hut is 200 bowls.Which of these pairs of points could be on Namibia's production possibilities frontier?&#10;A)(200 huts,30,000 bowls)and (150 huts,35,000 bowls)&#10;B)(200 huts,40,000 bowls)and (150 huts,30,000 bowls)&#10;C)(300 huts,50,000 bowl)and (200 huts,60,000 bowls)&#10;D)(300 huts,60,000 bowls)and (200 huts,80,000 bowls)

Accepted Answer

D

Question 4

Absolute advantage is found by comparing different producers'&#10;A)opportunity costs.&#10;B)payments to land,labor,and capital.&#10;C)input requirements per unit of output.&#10;D)locational and logistical circumstances.

Accepted Answer

Absolute advantage is based on the input requirements per unit of output. It refers to a producer's ability to produce a good using fewer inputs than another producer. Therefore, the correct choice is C.

Question 5

Table 3-4&#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.  &#10;Refer to Table 3-4.Which of the following points would be on Juanita's production possibilities frontier,based on a 40-hour week?&#10;A)(120 cellular phones programmed,295 cellular phones tested)&#10;B)(130 cellular phones programmed,225 cellular phones tested)&#10;C)(140 cellular phones programmed,155 cellular phones tested)&#10;D)Both (a)and (b)would be on Juanita's production possibilities frontier.

Accepted Answer

The answer of Table 3-4&#10;Juanita and Shantala run a business...

Question 6

Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer to Figure 3-1.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru produce in a given month?&#10;A)7 emeralds and 40 rubies&#10;B)5 emeralds and 92 rubies&#10;C)3 emeralds and 165 rubies&#10;D)2 emeralds and 180 rubies

Accepted Answer

The answer of Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer...

Question 7

Refer to Table 3-1.Assume that Andia and Zardia each has 360 minutes available.If each person divides his time equally between the production of wheat and beef,then total production is&#10;A)10.5 bushels of wheat and 16.5 pounds of beef.&#10;B)21 bushels of wheat and 33 pounds of beef.&#10;C)35 bushels of wheat and 22 pounds of beef.&#10;D)42 bushels of wheat and 66 pounds of beef.

Accepted Answer

For Andia, 360/2=180 minutes are available for each product. From the table, we can see that in 180 minutes, Andia can produce 3.5 bushels of wheat and 5.5 pounds of beef. Similarly, for Zardia, 360/2=180 minutes are available for each product. From the table, we can see that in 180 minutes, Zardia can produce 3.5 bushels of wheat and 5.5 pounds of beef. Adding up the production from both Andia and Zardia, we get a total production of 7 bushels of wheat and 11 pounds of beef. Multiplying this by 3 (since each person has 3 time blocks available) gives us a total production of 21 bushels of wheat and 33 pounds of beef. Therefore, the correct answer is B.

Question 8

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 0.
B)is between 0 and 1.
C)is equal to 1.
D)is greater than 1.

Accepted Answer

The opportunity cost of a bushel of corn is the amount of cotton that could have been produced with the same amount of resources. Likewise, the opportunity cost of a bushel of cotton is the amount of corn that could have been produced with the same amount of resources. Since the farmer can only grow either corn or cotton, the opportunity cost of growing one crop is the entire amount of the other crop that could have been produced instead. Therefore, the opportunity cost of a bushel of corn multiplied by the opportunity cost of a bushel of cotton is equal to the amount of cotton that could have been produced per bushel of corn. Similarly, it is also equal to the amount of corn that could have been produced per bushel of cotton. Since the farmer can only grow either corn or cotton, the opportunity cost of one bushel of one crop is always one bushel of the other crop that could have been produced instead. Therefore, the opportunity cost of a bushel of corn multiplied by the opportunity cost of a bushel of cotton is always equal to 1.

Question 9

When can two countries gain from trading two goods?&#10;A)when the first country can only produce the first good and the second country can only produce the second good&#10;B)when the first country can produce both goods,but can only produce the second good at great cost,and the second country can produce both goods,but can only produce the first good at great cost&#10;C)when the first country is better at producing both goods and the second country is worse at producing both goods&#10;D)Two countries could gain from trading two goods under all of the above conditions.

Accepted Answer

Two countries could gain from trading two goods under all of the above conditions. If the first country can only produce the first good and the second country can only produce the second good, they can trade those goods to each other without competition. If one country has a comparative advantage in producing one good, and the second country has a comparative advantage in producing the other good, both countries can gain from specializing in the good in which they have a comparative advantage and trading with each other. If the first country is better at producing both goods, but the second country has a lower opportunity cost in producing the first good, they can still gain from trading because the first country can specialize in producing the second good and trade with the second country. Essentially, as long as the opportunity costs of producing the goods are different in each country, they can gain from trading.

Question 10

The opportunity cost of an item is&#10;A)the number of hours that one must work in order to buy one unit of the item.&#10;B)what you give up to get that item.&#10;C)always less than the dollar value of the item.&#10;D)always greater than the cost of producing the item.

Accepted Answer

Opportunity cost refers to what you give up in order to obtain that particular item. It is the cost of the next best alternative that you could have chosen instead. Therefore, option B is the correct answer. Options A, C, and D are incorrect as they do not accurately describe opportunity cost.

Question 11

Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer to Figure 3-1.If the production possibilities frontier shown is for one month of production,then which of the following combinations of emeralds and rubies could Peru not produce in a given month?&#10;A)6 emeralds and 60 rubies&#10;B)4 emeralds and 120 rubies&#10;C)3 emeralds and 160 rubies&#10;D)1 emeralds and 210 rubies

Accepted Answer

The answer of Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer...

Question 12

Table 3-3&#10;Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.  &#10;Refer to Table 3-3.Assume that Japan and Korea each has 2400 hours available.If each country divides its time equally between the production of cars and airplanes,then total production is&#10;A)40 cars and 8 airplanes.&#10;B)64 cars and 16 airplanes.&#10;C)80 cars and 16 airplanes.&#10;D)128 cars and 32 airplanes.

Accepted Answer

The answer of Table 3-3&#10;Assume that Japan and Korea can...

Question 13

Table 3-3&#10;Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.  &#10;Refer to Table 3-3.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 cars along the horizontal axis,then&#10;A)the slope of Japan's production possibilities frontier would be -5 and the slope of Korea's production possibilities frontier would be -3.&#10;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.&#10;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.&#10;D)the slope of Japan's production possibilities frontier would be 5 and the slope of Korea's production possibilities frontier would be 3.

Accepted Answer

The answer of Table 3-3&#10;Assume that Japan and Korea can...

Question 14

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&#10;A)rely upon the government to provide us with the basic necessities of life.&#10;B)rely upon one another for the goods and services we consume.&#10;C)have similar tastes and abilities.&#10;D)are concerned about one another's well-being.

Accepted Answer

The answer of When an economist points out that you...

Question 15

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&#10;A)if he devotes all of his available resources to watermelon production,then he can produce 80 watermelons.&#10;B)he cannot have a comparative advantage over other farmers in producing cantaloupes.&#10;C)his opportunity cost of one watermelon is 2/3 of a cantaloupe.&#10;D)his production possibilities frontier is bowed-out.

Accepted Answer

The answer of If he devotes all of his available...

Question 16

Table 3-2&#10;Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.  &#10;Refer to Table 3-2.Which of the following combinations of coolers and radios could Aruba produce in one 40-hour week?&#10;A)3 coolers and 7 radios&#10;B)5 coolers and 6 radios&#10;C)11 coolers and 4 radios&#10;D)13 coolers and 3 radios

Accepted Answer

The answer of Table 3-2&#10;Assume that Aruba and Iceland can...

Question 17

Canada and the U.S.both produce wheat and computer software.Canada is said to have the comparative advantage in producing wheat if&#10;A)Canada requires fewer resources than the U.S.to produce a bushel of wheat.&#10;B)the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.&#10;C)the opportunity cost of producing a bushel of wheat is lower for the U.S.than it is for Canada.&#10;D)the U.S.has an absolute advantage over Canada in producing computer software.

Accepted Answer

The answer of Canada and the U.S.both produce wheat and...

Question 18

Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer to Figure 3-1.The fact that the line slopes downward reflects the fact that&#10;A)for Peru,it is more costly to produce emeralds than it is to produce rubies.&#10;B)Peru will produce more emeralds and fewer rubies as time goes by.&#10;C)Peru faces a tradeoff between producing emeralds and producing rubies.&#10;D)Peru should specialize in producing rubies.

Accepted Answer

The answer of Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer...

Question 19

A production possibilities frontier is bowed outward when&#10;A)the more resources the economy uses to produce one good,the fewer resources it has available to produce the other good.&#10;B)an economy is self-sufficient instead of interdependent and engaged in trade.&#10;C)the rate of tradeoff between the two goods being produced is constant.&#10;D)the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.

Accepted Answer

The answer of A production possibilities frontier is bowed outward...

Question 20

Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer to Figure 3-1.If the production possibilities frontier shown is for 40 hours of production,then how long does it take Peru to make one ruby?&#10;A)1/6 hour&#10;B)1/5 hour&#10;C)5 hours&#10;D)6 hours

Accepted Answer

The answer of Figure 3-1&#10;Peru's Production Possibilities Frontier  &#10;Refer...

Question 21

Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities Frontier    &#10;Refer to Figure 3-2.Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan.Which of the following combinations of bolts and nails could Azerbaijan then consume,assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?&#10;A)8 bolts and 56 nails&#10;B)14 bolts and 44 nails&#10;C)18 bolts and 32 nails&#10;D)20 bolts and 26 nails

Accepted Answer

The answer of Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities...

Question 22

Table 3-1&#10;Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.  &#10;Refer to Table 3-1.Andia has a comparative advantage in the production of&#10;A)wheat and Zardia has a comparative advantage in the production of beef.&#10;B)beef and Zardia has a comparative advantage in the production of wheat.&#10;C)both goods and Zardia has a comparative advantage in the production of neither good.&#10;D)neither good and Zardia has a comparative advantage in the production of both goods.

Accepted Answer

The answer of Table 3-1&#10;Assume that Andia and Zardia can...

Question 23

Table 3-1&#10;Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.  &#10;Refer to Table 3-1.What is Andia's opportunity cost of producing one pound of beef?&#10;A)3/5 bushel of wheat&#10;B)6/5 bushels of wheat&#10;C)4/3 bushels of wheat&#10;D)5/3 bushels of wheat

Accepted Answer

The answer of Table 3-1&#10;Assume that Andia and Zardia can...

Question 24

Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities Frontier    &#10;Refer to Figure 3-2.Without trade,Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails.As a result,Uzbekistan gained&#10;A)2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails.&#10;B)4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails.&#10;C)14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails.&#10;D)16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails.

Accepted Answer

The answer of Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities...

Question 25

Table 3-1&#10;Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.  &#10;Refer to Table 3-1.What is Zardia's opportunity cost of producing one bushel of wheat?&#10;A)2/3 pound of beef&#10;B)3/4 pound of beef&#10;C)5/6 pound of beef&#10;D)3/2 pounds of beef

Accepted Answer

The answer of Table 3-1&#10;Assume that Andia and Zardia can...

Question 26

Adam Smith asserted that a person should never attempt to make at home&#10;A)what it will cost him more to make than to buy.&#10;B)any good in which that person does not have an absolute advantage.&#10;C)any luxury good.&#10;D)any necessity.

Accepted Answer

The answer of Adam Smith asserted that a person should...

Question 27

Specialization and trade are closely linked to&#10;A)absolute advantage.&#10;B)comparative advantage.&#10;C)gains to some traders that exactly offset losses to other traders.&#10;D)shrinkage of the economic pie.

Accepted Answer

The answer of Specialization and trade are closely linked to&#10;A)absolute...

Question 28

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.Suppose that trade is then initiated between the two countries,and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat.Freedonia will now be able to consume a maximum of

A)30 units of corn and 30 units of wheat.
B)40 units of corn and 30 units of wheat.
C)40 units of corn and 20 units of wheat.
D)10 units of corn and 40 units of wheat.

Accepted Answer

The answer of Suppose that a worker in Freedonia can...

Question 29

Table 3-6 $$\begin{array} { c c c c c } &#10;&&&  { \text { Labor Hours Needed to } } &&&& { \text { Amount } } \&#10;&&&  { \text { Make 1 Pound of } } &&&& \text { Produced in } 40 \text { hours } \\hline&#10;\end{array}$$&#10;$$\begin{array} { c c c c c } &#10;& \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \&#10;\hline \text { Farmer A } & 8 \text { hours/pound } & 5 \text { hours/pound } & 5 \text { pounds } & 8 \text { pounds } \&#10;\text { Farmer B } & 4 \text { hours/pound } & 10 \text { hours/pound } & 10 \text { pounds } & 4 \text { pounds }&#10;\end{array}$$&#10;&#10;-Refer to Table 3-6.For farmer A,the opportunity cost of 1 pound of meat is&#10;A)0.625 pound of potatoes.&#10;B)1.6 pounds of potatoes.&#10;C)5 pounds of potatoes.&#10;D)8 pounds of potatoes.

Accepted Answer

The answer of Table 3-6 \[\begin{array} { c c c...

Question 30

Table 3-6 $$\begin{array} { c c c c c } &#10;&&&  { \text { Labor Hours Needed to } } &&&& { \text { Amount } } \&#10;&&&  { \text { Make 1 Pound of } } &&&& \text { Produced in } 40 \text { hours } \\hline&#10;\end{array}$$&#10;$$\begin{array} { c c c c c } &#10;& \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \&#10;\hline \text { Farmer A } & 8 \text { hours/pound } & 5 \text { hours/pound } & 5 \text { pounds } & 8 \text { pounds } \&#10;\text { Farmer B } & 4 \text { hours/pound } & 10 \text { hours/pound } & 10 \text { pounds } & 4 \text { pounds }&#10;\end{array}$$&#10;&#10;-Refer to Table 3-6.Relative to farmer A,farmer B rancher has an absolute advantage in the production of&#10;A)meat,but not in the production of potatoes.&#10;B)potatoes,but not in the production of meat.&#10;C)both meat and potatoes.&#10;D)neither meat nor potatoes.

Accepted Answer

The answer of Table 3-6 \[\begin{array} { c c c...

Question 31

Comparative advantage is related most closely to which of the following?&#10;A)output per hour&#10;B)opportunity cost&#10;C)efficiency&#10;D)bargaining strength in international trade

Accepted Answer

The answer of Comparative advantage is related most closely to...

Question 32

Table 3-6 $$\begin{array} { c c c c c } &#10;&&&  { \text { Labor Hours Needed to } } &&&& { \text { Amount } } \&#10;&&&  { \text { Make 1 Pound of } } &&&& \text { Produced in } 40 \text { hours } \\hline&#10;\end{array}$$&#10;$$\begin{array} { c c c c c } &#10;& \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \&#10;\hline \text { Farmer A } & 8 \text { hours/pound } & 5 \text { hours/pound } & 5 \text { pounds } & 8 \text { pounds } \&#10;\text { Farmer B } & 4 \text { hours/pound } & 10 \text { hours/pound } & 10 \text { pounds } & 4 \text { pounds }&#10;\end{array}$$&#10;&#10;-Refer to Table 3-6.For farmer B,the opportunity cost of 16 pounds of meat is&#10;A)4.0 pounds of potatoes.&#10;B)5.2 pounds of potatoes.&#10;C)6.4 pounds of potatoes.&#10;D)9.6 pounds of potatoes.

Accepted Answer

The answer of Table 3-6 \[\begin{array} { c c c...

Question 33

Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities Frontier    &#10;Refer to Figure 3-2.If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails,then&#10;A)neither Uzbekistan nor Azerbaijan will gain from this trade.&#10;B)Uzbekistan will gain from this trade,but Azerbaijan will not.&#10;C)Azerbaijan will gain from this trade,but Uzbekistan will not.&#10;D)both Uzbekistan and Azerbaijan will gain from this trade.

Accepted Answer

The answer of Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities...

Question 34

Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities Frontier    &#10;Refer to Figure 3-2.Suppose Uzbekistan decides to increase its production of bolts by 10.What is the opportunity cost of this decision?&#10;A)1/2 nail&#10;B)2 nails&#10;C)5 nails&#10;D)20 nails

Accepted Answer

The answer of Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities...

Question 35

Table 3-6 $$\begin{array} { c c c c c } &#10;&&&  { \text { Labor Hours Needed to } } &&&& { \text { Amount } } \&#10;&&&  { \text { Make 1 Pound of } } &&&& \text { Produced in } 40 \text { hours } \\hline&#10;\end{array}$$&#10;$$\begin{array} { c c c c c } &#10;& \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \&#10;\hline \text { Farmer A } & 8 \text { hours/pound } & 5 \text { hours/pound } & 5 \text { pounds } & 8 \text { pounds } \&#10;\text { Farmer B } & 4 \text { hours/pound } & 10 \text { hours/pound } & 10 \text { pounds } & 4 \text { pounds }&#10;\end{array}$$&#10;&#10;-Refer to Table 3-6.For farmer A,12.8 pounds of&#10;A)meat is the opportunity cost of 10.6 pounds of potatoes.&#10;B)meat is the opportunity cost of 16.0 pounds of potatoes.&#10;C)potatoes is the opportunity cost of 6.8 pounds of meat.&#10;D)potatoes is the opportunity cost of 8.0 pounds of meat.

Accepted Answer

The answer of Table 3-6 \[\begin{array} { c c c...

Question 36

Table 3-5&#10;Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.  &#10;Refer to Table 3-5.Varick has a comparative advantage in the production of&#10;A)wheat.&#10;B)cloth.&#10;C)both goods.&#10;D)neither good.

Accepted Answer

The answer of Table 3-5&#10;Assume that Falda and Varick can...

Question 37

Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities Frontier    &#10;Refer to Figure 3-2.Azerbaijan's opportunity cost of one nail is&#10;A)1/4 bolt and Uzbekistan's opportunity cost of one nail is 1/2 bolt.&#10;B)1/4 bolt and Uzbekistan's opportunity cost of one nail is 2 bolts.&#10;C)4 bolts and Uzbekistan's opportunity cost of one nail is 1/2 bolt.&#10;D)4 bolts and Uzbekistan's opportunity cost of one nail is 2 bolts.

Accepted Answer

The answer of Figure 3-2&#10;Uzbekistan's Production Possibilities Frontier&#10;Azerbaijan's Production Possibilities...

Question 38

Table 3-6 $$\begin{array} { c c c c c } &#10;&&&  { \text { Labor Hours Needed to } } &&&& { \text { Amount } } \&#10;&&&  { \text { Make 1 Pound of } } &&&& \text { Produced in } 40 \text { hours } \\hline&#10;\end{array}$$&#10;$$\begin{array} { c c c c c } &#10;& \text { Meat } & \text { Potatoes } & \text { Meat } & \text { Potatoes } \&#10;\hline \text { Farmer A } & 8 \text { hours/pound } & 5 \text { hours/pound } & 5 \text { pounds } & 8 \text { pounds } \&#10;\text { Farmer B } & 4 \text { hours/pound } & 10 \text { hours/pound } & 10 \text { pounds } & 4 \text { pounds }&#10;\end{array}$$&#10;&#10;-Refer to Table 3-6.For farmer B,the opportunity cost of 1 pound of meat is&#10;A)0.4 pound of potatoes.&#10;B)2.5 pounds of potatoes.&#10;C)4 pounds of potatoes.&#10;D)10 pounds of potatoes.

Accepted Answer

The answer of Table 3-6 \[\begin{array} { c c c...

Question 39

Table 3-5&#10;Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.  &#10;Refer to Table 3-5.Falda has an absolute advantage in the production of&#10;A)wheat.&#10;B)cloth.&#10;C)both goods.&#10;D)neither good.

Accepted Answer

The answer of Table 3-5&#10;Assume that Falda and Varick can...

Question 40

Table 3-1&#10;Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.  &#10;Refer to Table 3-1.Andia has an absolute advantage in the production of&#10;A)wheat and Zardia has an absolute advantage in the production of beef.&#10;B)beef and Zardia has an absolute advantage in the production of wheat.&#10;C)both goods and Zardia has an absolute advantage in the production of neither good.&#10;D)neither good and Zardia has an absolute advantage in the production of both goods.

Accepted Answer

The answer of Table 3-1&#10;Assume that Andia and Zardia can...

Question 41

Unless two people who are producing two goods have exactly the same opportunity costs,then one person will have a comparative advantage in one good,and the other person will have a comparative advantage in the other good.

Accepted Answer

The answer of Unless two people who are producing two...

Question 42

Assume a farmer has the ability to produce corn and/or beans.Whenever the farmer spends 1 hour less producing corn and 1 hour more producing beans,he reduces his output of corn by 2 bushels and raises his output of beans by 3 bushels.In view of these assumptions,the farmer's production possibilities frontier is bowed out.

Accepted Answer

The answer of Assume a farmer has the ability to...

Question 43

A country that currently does not trade with other countries could benefit by&#10;A)restricting imports and promoting exports.&#10;B)promoting imports and restricting exports.&#10;C)restricting both imports and exports.&#10;D)not restricting trade.

Accepted Answer

The answer of A country that currently does not trade...

Question 44

Which of the following is not correct?&#10;A)Economists are generally united in their support of free trade.&#10;B)The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over time.&#10;C)David Ricardo argued that Britain should not restrict imports of grain.&#10;D)Economists' opposition to trade restrictions is still based largely on the principle of absolute advantage.

Accepted Answer

The answer of Which of the following is not correct?&#10;A)Economists...

Question 45

A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce.

Accepted Answer

The answer of A production possibilities frontier is a graph...

Question 46

Which famous economist developed the principle of comparative advantage as we know it today?&#10;A)Adam Smith&#10;B)David Ricardo&#10;C)John Maynard Keynes&#10;D)Milton Friedman

Accepted Answer

The answer of Which famous economist developed the principle of...

Question 47

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

Accepted Answer

The answer of The gains from specialization and trade are...

Question 48

Which of the following is not an example of the principle that trade can make everyone better off?&#10;A)Americans buy tube socks from China.&#10;B)Residents of Maine drink orange juice from Florida.&#10;C)A homeowner hires the kid next door to mow the lawn.&#10;D)All of the above are examples of the principle that trade can make everyone better off.

Accepted Answer

The answer of Which of the following is not an...

Question 49

If one producer has the absolute advantage in the production of all goods,then that same producer will have the comparative advantage in the production of all goods as well.

Accepted Answer

The answer of If one producer has the absolute advantage...

Question 50

Trade allows a country to consume outside its production possibilities frontier.

Accepted Answer

The answer of Trade allows a country to consume outside...

Question 51

In most countries today,many goods and services consumed are imported from abroad,and many goods and services produced are exported to foreign customers.

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The answer of In most countries today,many goods and services...

Question 52

The production possibilities frontier shows the trade-offs that the producer faces but does not identify the choice the producer will make.

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The answer of The production possibilities frontier shows the trade-offs...

Question 53

By definition,imports are&#10;A)people who work in foreign countries.&#10;B)goods in which a country has an absolute advantage.&#10;C)limits placed on the quantity of goods leaving a country.&#10;D)goods produced abroad and sold domestically.

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The answer of By definition,imports are&#10;A)people who work in foreign...

Question 54

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

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The answer of For a country producing two goods,the opportunity...

Question 55

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year,and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year.There are 10 workers in each country.Political pressure from the fish lobby in Farmland and from the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland.As a result,Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year.If the political pressure were overcome and trade were to occur,each country would completely specialize in the product in which it has a comparative advantage.If trade were to occur,the combined output of the two countries would increase by

A)25 units of wheat and 25 units of fish.
B)50 units of wheat and 50 units of fish.
C)75 units of wheat and 75 units of fish.
D)100 units of wheat and 100 units of fish.

Accepted Answer

The answer of Suppose that a worker in Boatland can...

Question 56

Economists generally support&#10;A)trade restrictions.&#10;B)government management of trade.&#10;C)export subsidies.&#10;D)free international trade.

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The answer of Economists generally support&#10;A)trade restrictions.&#10;B)government management of trade.&#10;C)export...

Question 57

By definition,exports are&#10;A)limits placed on the quantity of goods brought into a country.&#10;B)goods in which a country has an absolute advantage.&#10;C)people who work in foreign countries.&#10;D)goods produced domestically and sold abroad.

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The answer of By definition,exports are&#10;A)limits placed on the quantity...

Question 58

Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods.

Accepted Answer

The answer of Two countries can achieve gains from trade...

Question 59

Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost.

Accepted Answer

The answer of Trade allows a person to obtain goods...

Question 60

When two countries trade with one another,it is most likely because&#10;A)the wealthy people in each of the two countries are able to benefit,through trade,by taking advantage of other people who are poor.&#10;B)some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade.&#10;C)the opportunity costs of producing various goods are identical for the two countries.&#10;D)the two countries wish to take advantage of the principle of comparative advantage.

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The answer of When two countries trade with one another,it...

Question 61

Explain the difference between absolute advantage and comparative advantage.Which is more important in determining trade patterns,absolute advantage or comparative advantage?&#10; Why?

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The answer of Explain the difference between absolute advantage and...

Question 62

Adam Smith developed the theory of comparative advantage as we know it today.

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The answer of Adam Smith developed the theory of comparative...

Question 63

The only two countries in the world,Alpha and Omega,face the following production possibilities frontiers.&#10;Alpha's Production Possibilities Frontier&#10;Omega's Production Possibilities Frontier   &#10;   &#10;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.&#10;b.If these countries choose not to trade,what would be the total world production of popcorn and peanuts?&#10;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?&#10;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.

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The answer of The only two countries in the world,Alpha...

Question 64

Fahd and Adil must prepare a presentation for their marketing class.As part of their presentation,they must do a series of calculations and prepare 50 PowerPoint slides.It would take Fahd 10 hours to do the required calculation and 10 hours to prepare the slides.It would take Adil 12 hours to do the calculations and 20 hours to prepare the slides.&#10;a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally?&#10;b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides?&#10;c.If Fahd and Adil have the same opportunity cost of $5 per hour,is there a better solution than for each to specialize in calculating or preparing slides?

Accepted Answer

The answer of Fahd and Adil must prepare a presentation...

Deck 3: Interdependence and the Gains From Trade