ECON 1A - PS 3

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

rises

Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day. Jamaica's opportunity cost of one cooler is

0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios

Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production of cheese is _____.

10

Assume that Nick and Faldo each has 2 hours available. If each person divides his time equally between the production of wheat and cloth, then total production of wheat is ______ bushels.

14

Assume that Maya and Miguel each has 60 hours available. If each person divides his/her time equally between the production of mixers and toasters, then total production of toasters is _____.

16

Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production of cheese is ___ while total production of wine is ___.

24, 15

Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production of potatoes is _______.

4.5

Shawn is capable of producing more donuts than Sue in a given amount of time. All of the following statements are true except the one indicating that

Shawn can have a comparative advantage in both activities

Which of the following is not correct?

The gains from specialization and trade are based not on comparative advantage but on absolute advantage

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

Traci has an absolute advantage in chairs

The US has a comparative advantage in the production of ____.

cheese

Total output in an economy increases when each person specializes because

each person spends more time producing that product in which he or she has a comparative advantage

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

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,

has an absolute advantage in the production of that good

Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate: Huang has an absolute advantage in the production of

neither good and a comparative advantage in the production of parasols

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

they choose not to trade with one another

Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate: Zimbabwe has an absolute advantage in the production of

toothbrushes and a comparative advantage in the production of toothbrushes

Jerry is a higher ranking administrator, earning $200 per hour of work 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 higher than Quinn's.

true

Suppose Hank and Tony can both produce corn. If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn.

true

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

true