chapter III quiz

Refer to Table 3-24. The opportunity cost of 1 unit of cheese for England is

1/4 unit of bread.

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

true

as long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

true

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

true

Refer to Table 3-11. Assume that Max and Min each have 36 labor hours available. If each person divides his/her time equally between the production of mittens and hats, then total production is

18 mittens and 7.5 hats.

Refer to Table 3-6. Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?

5 toothbrushes and 11 hairbrushes

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

C. Neither country could gain from trade with each other because neither one has a comparative advantage.

If US workers can produce everything in less time than Mexican workers, it is not possible for the US to gain from trade with Mexico.

false

Refer to Figure 3-3. If the production possibilities shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together not produce in a given day?

D) 600 tacos and 250 burritos

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

D. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

Refer to Table 3-25. Miguel has an absolute advantage in the production of

D. neither good and a comparative advantage in the production of toasters

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

True

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. Sylvania will now be able to consume a maximum of

a. 30 units of corn and 30 units of wheat

Refer to Table 3-26. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?

a. 9 airplanes

Refer to Table 3-22. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision?

b. 3 hairbrushes

refer to Table 3-24. At which of the following prices would both England and Spain gain from trade with each other?

c. 16 units of bread for 48 units of cheese

Refer to Table 3-5. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

c. 20 radios & 50 coolers

refer to figure 3-21: 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...

d. both Uzbekistan and Azerbaijan will gain from this trade.

Refer to Table 3-22. Portugal has an absolute advantage in the production of

d. hairbrushes and a comparative advantage in the production of hairbrushes

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.

false

harry is a computer company executive, earning $200 per hour managing the company and promoting its products. his daughter quinn is a high school student, earning $6 per hour helping her grandmother on the farm. harry's computer is broken. he can repair it himself in one hour. quinn can repair it in 10 hours. harry's opportunity cost of repairing the computer is lower than quinn's.

false

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.

false

opportunity cost refers to how many inputs a producer requires to produce a good.

false

comparative advantage

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

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

true, because two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. All that is necessary is that each country has a comparative advantage in some good.