Question 1

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Accepted Answer

A)   Ken has an absolute advantage in chairs.
B)   Ken has a comparative advantage in tables.
C)   Traci has an absolute advantage in chairs.
D)   Traci has a comparative advantage in chairs.E) None of the above
F) A) and D)

Question 2

Table 3-3
Production Opportunities
 
-Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

Accepted Answer

A)   12 units of cheese and 7 units of wine
B)   16 units of cheese and 6 units of wine
C)   20 units of cheese and 5 units of wine
D)   26 units of cheese and 4 units of wineE) All of the above
F) A) and D)

Question 3

Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?

Accepted Answer

A)   $99
B)   $49
C)   $29
D)   Alexis would always mow her own lawn because she can do it faster.E) A) and B)
F) B) and D)

Question 4

In an economy consisting of two people producing two goods, it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 5

Figure 3-16
Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier 
-Refer to Figure 3-16. Hosne has an absolute advantage in the production of

Accepted Answer

A)   purses and Merve has an absolute advantage in the production of wallets.
B)   wallets and Merve has an absolute advantage in the production of purses.
C)   both goods and Merve has an absolute advantage in the production of neither good.
D)   neither good and Merve has an absolute advantage in the production of both goods.E) A) and B)
F) B) and C)

Question 6

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. For Bonovia, what is the opportunity cost of a pound of cheese?

Accepted Answer

A)   0.8 pounds of ham
B)   1.25 pounds of ham
C)   8 pounds of ham
D)   16 pounds of hamE) C) and D)
F) B) and C)

Question 7

Table 3-28
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies.
 
-Refer to Table 3-28. Jim has an absolute advantage in

Accepted Answer

A)   both setting up and testing computers and a comparative advantage in setting up computers.
B)   both setting up and testing computers and a comparative advantage in testing computers.
C)   neither setting up nor testing computers and a comparative advantage in setting up computers.
D)   neither setting up nor testing computers and a comparative advantage in testing computers.E) B) and D)
F) C) and D)

Question 8

It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6 hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.

Accepted Answer

A) True 
 B)False

Question 9

Figure 3-7
Bintu's Production Possibilities Frontier Juba's Production Possibilities Frontier 
-Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together make in a given 4-hour production period?

Accepted Answer

A)   1 bowl and 14 cups
B)   2 bowls and 11 cups
C)   3 bowls and 10 cups
D)   5 bowls and 5 cupsE) C) and D)
F) None of the above

Question 10

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. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if

Accepted Answer

A)   Cropitia can produce more than 400 pounds of ham per month.
B)   Cropitia can produce more than 320 pounds of cheese per month.
C)   Cropitia's opportunity cost of producing a pound of ham is less than 0.8 pounds of cheese.
D)   Cropitia's opportunity cost of producing a pound of ham is greater than 0.8 pounds of cheese.E) A) and B)
F) None of the above

Question 11

Table 3-8
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
 
-Refer to Table 3-8. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. 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 ­0.67 and the slope of Spain's production possibilities frontier would be -0.5.
B)   the slope of England's production possibilities frontier would be ­1.5 and the slope of Spain's production possibilities frontier would be -2.
C)   the slope of England's production possibilities frontier would be ­.75 and the slope of Spain's production possibilities frontier would be -1.
D)   the slope of England's production possibilities frontier would be ­2 and the slope of Spain's production possibilities frontier would be -.5.E) A) and B)
F) All of the above

Question 12

Figure 3-15
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier
 
-Refer to Figure 3-15. Perry has an absolute advantage in the production of

Accepted Answer

A)   novels and Jordan has an absolute advantage in the production of poems.
B)   poems and Jordan has an absolute advantage in the production of novels.
C)   novels and Jordan has an absolute advantage in the production of neither good.
D)   neither good and Jordan has an absolute advantage in the production of novels.E) A) and C)
F) C) and D)

Question 13

Consider two individuals - Marquis and Serena - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Accepted Answer

A)   Marquis is very good at knitting sweaters and at cooking tasty food, but Serena's skills in both of these activities are very poor.
B)   Marquis and Serena both are very good at cooking tasty food, but neither has the necessary skills to knit a sweater.
C)   Marquis's cooking and knitting skills are very poor, and Serena's cooking and knitting skills are also very poor.
D)   Marquis's skills are such that he can produce only sweaters, and Serena's skills are such that she can produce only tasty food.E) A) and B)
F) All of the above

Question 14

Table 3-28
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies.
 
-Refer to Table 3-28. Barb has an absolute advantage in

Accepted Answer

A)   both setting up and testing computers and a comparative advantage in setting up computers.
B)   both setting up and testing computers and a comparative advantage in testing computers.
C)   neither setting up nor testing computers and a comparative advantage in setting up computers.
D)   neither setting up nor testing computers and a comparative advantage in testing computers.E) None of the above
F) B) and C)

Question 15

If Shawn can produce donuts at a lower opportunity cost than Sue, 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 should not produce donuts.
D)   Shawn is capable of producing more donuts than Sue in a given amount of time.E) A) and B)
F) C) and D)

Question 16

What must be given up to obtain an item is called

Accepted Answer

A)   out-of-pocket cost.
B)   comparative worth.
C)   opportunity cost.
D)   absolute value.E) A) and B)
F) A) and C)

Question 17

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?

Accepted Answer

Because Mary has a comparative...

Question 18

Figure 3-16
Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier 
-Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each other?

Accepted Answer

A)   5 wallets for 1.25 purses
B)   5 wallets for 2.5 purses
C)   5 wallets for 3.75 purses
D)   Hosne and Merve could not both gain from trade with each other at any price.E) C) and D)
F) A) and B)

Question 19

Figure 3-15
Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier
 
-Refer to Figure 3-15. Jordan should specialize in the production of

Accepted Answer

A)   novels.
B)   poems.
C)   both goods.
D)   neither good.E) C) and D)
F) B) and D)

Question 20

Table 3-6
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
 
-Refer to Table 3-6. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is

Accepted Answer

A)   24 toothbrushes and 12 hairbrushes.
B)   48 toothbrushes and 24 hairbrushes.
C)   96 toothbrushes and 48 hairbrushes.
D)   720 toothbrushes and 1440 hairbrushes.E) A) and B)
F) A) and C)

Exam 3: Interdependence and the Gains From Trade

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each other?

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

Correct Answer
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Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Hosne has an absolute advantage in the production of

Correct Answer
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Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?

Correct Answer
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Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has an absolute advantage in the production of

Correct Answer
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What must be given up to obtain an item is called

Correct Answer
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Correct Answer
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Correct Answer
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Consider two individuals - Marquis and Serena - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Correct Answer
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Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. -Refer to Table 3-28. Jim has an absolute advantage in

Correct Answer
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Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Jordan should specialize in the production of

Correct Answer
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Correct Answer
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Table 3-3 Production Opportunities -Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

Correct Answer
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In an economy consisting of two people producing two goods, it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Correct Answer
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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?

Correct Answer
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Because Mary has a comparative...
View Answer

Correct Answer
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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. For Bonovia, what is the opportunity cost of a pound of cheese?

Correct Answer
verified

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Correct Answer
verified

Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. -Refer to Table 3-28. Barb has an absolute advantage in

Correct Answer
verified

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. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each other?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 3-16 Hosne's Production Possibilities Frontier Merve's Production Possibilities Frontier -Refer to Figure 3-16. Hosne has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?

Correct AnswerverifiedShow Answer

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Perry has an absolute advantage in the production of

Correct AnswerverifiedShow Answer

What must be given up to obtain an item is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider two individuals - Marquis and Serena - each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Correct AnswerverifiedShow Answer

Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. -Refer to Table 3-28. Jim has an absolute advantage in

Correct AnswerverifiedShow Answer

Figure 3-15 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier -Refer to Figure 3-15. Jordan should specialize in the production of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 3-3 Production Opportunities -Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?

Correct AnswerverifiedShow Answer

In an economy consisting of two people producing two goods, it is possible for one person to have the absolute advantage and the comparative advantage in both goods.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedBecause Mary has a comparative...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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. For Bonovia, what is the opportunity cost of a pound of cheese?

Correct AnswerverifiedShow Answer

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

Correct AnswerverifiedShow Answer

Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. -Refer to Table 3-28. Barb has an absolute advantage in

Correct AnswerverifiedShow Answer

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. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if

Correct AnswerverifiedShow Answer

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Because Mary has a comparative...
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