Question 1

Ned is an intellectual property lawyer. He is not the best litigator in the firm, but he is the fastest typist in the world. Do you think that Ned should do his own typing?

Accepted Answer

The answer of Ned is an intellectual property lawyer. He...

Question 2

The table below describes the production possibilities for Lee and Amy in a four-hour shift.
NARRBEGIN: Table 3-5
Table 3-5
  NARREND
a. What is the opportunity cost of one coffee for each person? What is the opportunity cost of one croissant?
b. Who has a comparative advantage in coffees? Who has a comparative advantage in croissants?
c. Who has an absolute advantage in coffees? Who has an absolute advantage in croissants?
d. Who should produce coffees? Who should produce croissants?

Accepted Answer

The answer of The table below describes the production possibilities...

Question 3

John can milk 20 cows or feed 40 calves in one hour. Jared can milk 10 cows or feed 50 calves in one hour.
a. Who has the absolute advantage in milking cows? Who has the absolute advantage in feeding calves?
b. Who has the comparative advantage in milking cows? Who has the comparative advantage in feeding calves?
c. If John and Jared, who have been dividing their time equally between milking and feeding, each specialise in the activity in which they have a comparative advantage, how many additional cows can be milked and calves fed per hour?

Accepted Answer

The answer of John can milk 20 cows or feed...

Question 4

Describe two ways in which trade benefits a country.

Accepted Answer

The answer of Describe two ways in which trade benefits...

Question 5

What roles were played by Adam Smith and David Ricardo in developing the idea that trade is beneficial?

Accepted Answer

The answer of What roles were played by Adam Smith...

Question 6

In one day, John can make 100 of good X or 50 of good Y. In the same period Lucy can make 40 of good X and 80 of good Y.
a. If both people used half their time to make good X, what is the total amount of X that would be made?
b. Suppose the person with the comparative advantage in X reduced production by one unit of Y to make more X. Suppose that the person with the comparative advantage in Y reduced production of by one unit of X. How does the total production of X change compared to (a)?

Accepted Answer

The answer of In one day, John can make 100...

Question 7

Suppose that Vanuatu can produce 40 logs or 400 kg of sugar cane per month and Fiji can produce 30 logs or 300 kg of sugar cane per month. Will it pay for Vanuatu and Fiji to specialise and trade in these two commodities?

Accepted Answer

The answer of Suppose that Vanuatu can produce 40 logs...

Question 8

Sam and Mattie produce hogs and corn. Sam can produce 100 hogs or 2000 bushels of corn per year. Mattie can produce 80 hogs or 1200 bushels of corn per year. Suppose that both devote their time equally between the production of hogs and corn.
a. Who has the absolute advantage in production?
b. How many hogs are being produced in total before any trade?
c. How many less hogs would be produced if Sam grew 60 more bushels of corn instead?
d. How many more hogs would be produced if Mattie grew 60 less bushels of corn instead?

Accepted Answer

The answer of Sam and Mattie produce hogs and corn....

Question 9

Jack and Catherine have a cooperative project that must be completed for a business class. The project involves doing a series of calculations and writing a report. It would take Jack 10 hours to do the required calculation and 10 hours to write the report. It would take Catherine 12 hours to do the calculations and 20 hours to write the report.
a. How much time would it take the two to complete the project if they divide the calculations equally and the writing equally?
b. How much time would it take the two to complete the project if they use comparative advantage and specialise in calculating or writing?
c. If Catherine and Jack have the same opportunity cost of $5 per hour, is there a better solution than for each to specialise in calculating or writing?

Accepted Answer

The answer of Jack and Catherine have a cooperative project...

Question 10

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

Accepted Answer

The answer of Martha can prepare a meal in one...

Question 11

Is the statement 'international trade can make everyone better off' true? Why or why not?

Accepted Answer

The answer of Is the statement 'international trade can make...

Question 12

Keith is an Economics lecturer. He is extremely competent. And the students love his PowerPoint slideshows. He is one of the more creative designers of PowerPoints in the department. Using the appropriate language, what should Keith focus his energies on prior to a lecture?

Accepted Answer

The answer of Keith is an Economics lecturer. He is...

Question 13

Suppose that a worker in Argentina can make two saddles or 10 bridles per month, and a worker in Brazil can make three saddles or 20 bridles per month.
a. In what sense do saddles and bridles cost less in Brazil than in Argentina?
b. In what sense do saddles cost less in Argentina than in Brazil?
c. If Argentina and Brazil were to engage in trade, which country would export which good?
d. Would the answer to the above question change if a worker in Brazil could make four saddles per month?

Accepted Answer

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

Quiz 3: Interdependence and the Gains From Trade