HW3
It is possible for the S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers. True False
True
Differences in opportunity cost allow for gains from trade. True False
True
For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs. True False
True
Opportunity cost refers to how many inputs a producer requires to produce a good. True False
False
Adam Smith asserted that a person should never attempt to make at home a. What it will cost him more to make than to buy. b. Any good in which that person does not have an absolute advantage. c. Any luxury good. d. Any necessity.
a
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 the opportunity cost of 1 chair is a. 1/6 table for Ken and 1/3 table for Traci. b. 1/6 table for Ken and 3 tables for Traci. c. 6 tables for Ken and 1/3 table for Traci. d. 6 tables for Ken and 3 tables for Traci.
a
The most obvious benefit of specialization and trade is that they allow us to a. work more hours per week than we otherwise would be able to work. b. consume more goods than we otherwise would be able to consume. c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. d. consume more goods by forcing people in other countries to consume fewer goods.
b
When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all a. rely upon the government to provide us with the basic necessities of life. b. rely upon one another for the goods and services we consume. c. have similar tastes and abilities. d. are concerned about one another's wellbeing.
b
A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton a. is equal to 0. b. is between 0 and 1. c. is equal to 1. d. is greater than 1.
c
An economy's production possibilities frontier is also its consumption possibilities frontier a. under all circumstances. b. under no circumstances. c. when the economy is self-sufficient. d. when the rate of tradeoff between the two goods being produced is constant.
c
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, 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.
c