Question 1

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 2

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

Accepted Answer

A)   has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
B)   has a comparative advantage in the production of that good.
C)   has an absolute advantage in the production of that good.
D)   should be the only producer of that good.E) B) and D)
F) All of the above

Question 3

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Accepted Answer

A)   falls.
B)   stays the same.
C)   rises.
D)   may fall, rise, or stay the same.E) B) and C)
F) C) and D)

Question 4

Figure 3-21
Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier 
-Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of

Accepted Answer

A)   bolts and a comparative advantage in the production of bolts.
B)   bolts and a comparative advantage in the production of nails.
C)   nails and a comparative advantage in the production of bolts.
D)   nails and a comparative advantage in the production of nails.E) A) and D)
F) All of the above

Question 5

People who provide you with goods and services

Accepted Answer

A)   are acting out of generosity.
B)   do so because they get something in return.
C)   have chosen not to become interdependent.
D)   are required to do so by the government.E) B) and C)
F) A) and D)

Question 6

Table 3-3
Production Opportunities 
-Refer to Table 3-3. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring cheese along the horizontal axis, then

Accepted Answer

A)   the slope of England's production possibilities frontier would be ­4 and the slope of France's production possibilities frontier would be -0.4.
B)   the slope of England's production possibilities frontier would be ­0.25 and the slope of France's production possibilities frontier would be -2.5.
C)   the slope of England's production possibilities frontier would be 0.25 and the slope of France's production possibilities frontier would be 2.5.
D)   the slope of England's production possibilities frontier would be 4 and the slope of France's production possibilities frontier would be 0.4.E) A) and C)
F) A) and D)

Question 7

Figure 3-19
Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier 
-Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to

Accepted Answer

A)   1/2 pound of coffee.
B)   3/4 pound of coffee.
C)   4/3 pounds of coffee.
D)   2 pounds of coffee.E) B) and D)
F) A) and B)

Question 8

Table 3-32
US and French Production Opportunities 
-Refer to Table 3-32 The US has a comparative advantage in the production of

Accepted Answer

A)   wine.
B)   cheese.
C)   both wine and cheese.
D)   neither wine nor cheese.E) B) and C)
F) None of the above

Question 9

Figure 3-23
The graph below represents the various combinations of ham and cheese (in pounds)  that the nation of Bonovia could produce in a given month. 
-Refer to Figure 3-23. In the nation of Cropitia, the opportunity cost of a pound of cheese is 1.5 pounds of ham. Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for

Accepted Answer

A)   1.0 pound of ham.
B)   1.4 pounds of ham.
C)   2.1 pounds of ham.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 10

Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is

Accepted Answer

A)   2/5 bushel of squash.
B)   5/2 bushels of squash.
C)   2 bushels of squash.
D)   5 bushels of squash.E) C) and D)
F) All of the above

Question 11

Figure 3-21
Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier 
-Refer to Figure 3-21. Suppose Azerbaijan decides to increase its production of nails by 20. What is the opportunity cost of this decision?

Accepted Answer

A)   1/4 bolt
B)   4 bolts
C)   5 bolts
D)   80 boltsE) A) and B)
F) B) and C)

Question 12

Table 3-5
Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. 
-Refer to Table 3-5. Which of the following combinations of coolers and radios could Aruba produce in one 40- hour week?

Accepted Answer

A)   3 coolers and 7 radios
B)   5 coolers and 6 radios
C)   11 coolers and 4 radios
D)   13 coolers and 3 radiosE) None of the above
F) All of the above

Question 13

Figure 3-10
Alice and Betty's Production Possibilities in one 8­hour day.
Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier 
-Refer to Figure 3-10. Both Alice and Betty

Accepted Answer

A)   face a constant trade-off between producing pitchers of lemonade and pizzas.
B)   can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza production.
C)   would benefit from specializing in lemonade production.
D)   would benefit from specializing in pizza production.E) A) and B)
F) All of the above

Question 14

Figure 3-21
Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier 
-Refer to Figure 3-21. 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

Accepted Answer

A)   2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails.
B)   4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails.
C)   14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails.
D)   16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails.E) C) and D)
F) A) and D)

Question 15

Figure 3-24
The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time.
Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier  
-Refer to Figure 3-24. Betty has

Accepted Answer

A)   an absolute and comparative advantage producing good x.
B)   an absolute but not a comparative advantage producing good x.
C)   a comparative but not an absolute advantage producing good x.
D)   neither a comparative nor an absolute advantage producing good x.E) A) and D)
F) A) and C)

Question 16

Table 3-18
The following table contains some production possibilities for an economy for a given month. 
-Refer to Table 3-18. If the production possibilities frontier is a straight line, then "?" must be

Accepted Answer

A)   150.
B)   225.
C)   300.
D)   375.E) A) and D)
F) B) and D)

Question 17

Figure 3-22
Alice and Betty's Production Possibilities in one 8­hour day.
Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier 
-Refer to Figure 3-22. Which of the following statements is correct regarding comparative advantage?

Accepted Answer

A)   Alice has a comparative advantage in the production of both lemonade and pizzas.
B)   Betty has a comparative advantage in the production of both lemonade and pizzas.
C)   Alice has a comparative advantage in the production of pizzas while Betty has a comparative advantage in the production of lemonade.
D)   Alice has a comparative advantage in the production of lemonade while Betty has a comparative advantage in the production of pizzas.E) A) and B)
F) A) and D)

Question 18

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would

Accepted Answer

A)   make sense if Xenophobia had an absolute advantage in all goods.
B)   make sense if Xenophobia had no absolute advantages in any good.
C)   not make sense as long as Xenophobia had a comparative advantage in some good.
D)   not make sense as long as Xenophobia had an absolute advantage in at least half the goods that could be traded.E) A) and B)
F) None of the above

Question 19

Table 3-22
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. 
-Refer to Table 3-22. Portugal has an absolute advantage in the production of

Accepted Answer

A)   toothbrushes and a comparative advantage in the production of toothbrushes.
B)   toothbrushes and a comparative advantage in the production of hairbrushes.
C)   hairbrushes and a comparative advantage in the production of toothbrushes.
D)   hairbrushes and a comparative advantage in the production of hairbrushes.E) C) and D)
F) B) and D)

Question 20

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

Accepted Answer

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)   Sue has an absolute advantage in the production of donuts.E) A) and B)
F) C) and D)

Exam 3: Interdependence and the Gains From Trade

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of

Correct Answer
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Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Azerbaijan decides to increase its production of nails by 20. What is the opportunity cost of this decision?

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Table 3-3 Production Opportunities -Refer to Table 3-3. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring cheese along the horizontal axis, then

Correct Answer
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Table 3-5 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-5. Which of the following combinations of coolers and radios could Aruba produce in one 40- hour week?

Correct Answer
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Figure 3-24 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-24. Betty has

Correct Answer
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When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

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

Correct Answer
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People who provide you with goods and services

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Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Portugal has an absolute advantage in the production of

Correct Answer
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The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Correct Answer
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Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is

Correct Answer
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Figure 3-22 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. Which of the following statements is correct regarding comparative advantage?

Correct Answer
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Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to

Correct Answer
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Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would

Correct Answer
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Table 3-32 US and French Production Opportunities -Refer to Table 3-32 The US has a comparative advantage in the production of

Correct Answer
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Table 3-18 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-18. If the production possibilities frontier is a straight line, then "?" must be

Correct Answer
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The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

Correct Answer
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Figure 3-10 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

Correct Answer
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Exam 3: Interdependence and the Gains From Trade

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Figure 3-21 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier -Refer to Figure 3-21. Suppose Azerbaijan decides to increase its production of nails by 20. What is the opportunity cost of this decision?

Correct AnswerverifiedShow Answer

Table 3-3 Production Opportunities -Refer to Table 3-3. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring cheese along the horizontal axis, then

Correct AnswerverifiedShow Answer

Table 3-5 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-5. Which of the following combinations of coolers and radios could Aruba produce in one 40- hour week?

Correct AnswerverifiedShow Answer

Figure 3-24 The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time. Bob's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-24. Betty has

Correct AnswerverifiedShow Answer

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

People who provide you with goods and services

Correct AnswerverifiedShow Answer

Table 3-22 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. -Refer to Table 3-22. Portugal has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.

Correct AnswerverifiedShow Answer

Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is

Correct AnswerverifiedShow Answer

Figure 3-22 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. Which of the following statements is correct regarding comparative advantage?

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Figure 3-19 Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier -Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to

Correct AnswerverifiedShow Answer

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would

Correct AnswerverifiedShow Answer

Table 3-32 US and French Production Opportunities -Refer to Table 3-32 The US has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

Table 3-18 The following table contains some production possibilities for an economy for a given month. -Refer to Table 3-18. If the production possibilities frontier is a straight line, then "?" must be

Correct AnswerverifiedShow Answer

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 3-10 Alice and Betty's Production Possibilities in one 8­hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

Correct AnswerverifiedShow Answer

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Figure 3-22 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-22. Which of the following statements is correct regarding comparative advantage?

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Figure 3-10 Alice and Betty's Production Possibilities in one 8hour day. Alice's Production Possibilities Frontier Betty's Production Possibilities Frontier -Refer to Figure 3-10. Both Alice and Betty

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