Econ Ch. 3

Absolute advantage is found by comparing different producers'

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

Table 3-12Barb 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. ​ ​ Minutes Needed toNumber of Computers Set Up or Tested in a 40-Hour Week Set Up 1 Computer Test 1 Computer Computers Set UpComputers Tested Barb48?5040 Jim30408060 ​ Refer to Table 3-12. Which of the following points would not be on Jim's production possibilities frontier, based on a 40-hour week?

(60 computers set up, 12 computers tested)

Table 3-24Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. ​ Labor Hours Needed to Make 1 Unit ofNumber of Units Produced in 40 Hours CheeseBreadCheeseBread England 144010 Spain 48105 ​ Refer to Table 3-24. England has a comparative advantage in the production of

. cheese and Spain has a comparative advantage in the production of bread.

Table 3-25Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. ​ Hours Needed to Make 1Amount Produced in 40 Hours mixertoastermixerstoastersMaya8558Miguel201024 Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is

1/2 mixer

Table 3-27Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. ​ Labor Hours Needed to Make 1Quantity Produced in 36 Hours ParasolPlateParasolPlateHuang26186Min24189 Refer to Table 3-27. The opportunity cost of 1 parasol for Min is

1/2 plate

Figure 3-6 Maxine's Production Possibilities FrontierDaisy's Production Possibilities Frontier Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?

1/4 hour

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

15 blankets and 35 meals

able 3-11Assume that Max and Min can switch between producing mittens and producing hats at a constant rate. ​ Labor Hours Needed to Make 1Quantity Produced in 36 Hours MittensHatsMittensHats Max26186Min24189 Refer to Table 3-11. Assume that Max and Min each has 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.

Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. ​ Labor Hours Needed to Make 1 Pound ofPounds Produced in 24 Hours MeatPotatoesMeatPotatoesFarmer 6 4 4 6 Rancher 3 8 8 3 Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?

2 pounds of meat and 2 pounds of potatoes.

Table 3-3Production Opportunities Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours Cheese Wine Cheese Wine England 1 4 40 10 France 5 2 8 20 ​ Refer to Table 3-3. 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 is

24 units of cheese and 15 units of wine

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 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

340 Bushels of Corn and 500 Bushels of oats

Figure 3-3 Arturo's Production Possibilities FrontierDina's Production Possibilities Frontier Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is

400 tacos and 250 burritos.

Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by

6

Figure 3-17 Maxine's Production Possibilities FrontierDaisy's Production Possibilities Frontier Refer to Figure 3-17. Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy. Which of the following combinations of pies and tarts could Maxine not then consume, assuming Maxine specializes in making pies and Daisy specializes in making tarts?

6 pies and 5 tarts

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 3-12. The number of minutes needed by Barb to test a computer is

60.

Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. ​ Minutes Needed to Number of Cellular Phones Programmed or Tested in a 40-Hour Week Program 1 Cellular PhoneTest 1 Cellular PhoneCellular Phones ProgrammedCellular Phones TestedJuanita ?21601200Shantala104240600 Refer to Table 3-29. Juanita's opportunity cost of programming one cellular phone is testing

7.5 cellular phones and shantala's opportunity cost of programming one cellular phone is testing 5/2 cellular phones

able 3-9Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. ​ Hours Needed to Make 1Amount Produced in 60 Hours MixerToasterMixerToaster Maya 631020Miguel105612 Refer to Table 3-9. 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 is

8 mixers and 16 toasters.

Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate. Labor HoursNeeded to Make 1 Cooler Radio Aruba 2 5 Iceland 1 4 Refer to Table 3-5. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

Graph A (50,20)

Assume that Max and Min can switch between producing mittens and producing hats at a constant rate. ​ Labor Hours Needed to Make 1Quantity Produced in 36 Hours MittensHatsMittensHats Max26186Min24189 Refer to Table 3-11. Which of the following points would be on Min's production possibilities frontier, based on a 36-hour production period?

More than one of the above would be on Min's production possibilities frontier

Table 3-37 Output of pottery in one six-hour session VasesMugs Sarah 8 32 Charles 10 25 ​ ​Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah's opportunity cost to produce one vase is

Sarah has an absolute advantage in the production of mugs and Charles has an absolute advantage in the production of vases. Answer = 4 mugs and charle's opportunity cost of producing one vase is 2.5 mugs

Table 3-33Chris and Tony's Production Opportunities TomatoesPasta SauceChris 10 lbs 300 jars Tony 14 lbs 280 jars Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following statements is correct?

Tony has an absolute advantage in the production of tomatoes.

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. Minutes Needed to Make 1 Bushel of Wheat Pound of Beef Brad 10 12 Theresa 6 10 Refer to Table 3-20. Brad should specialize in the production of

beef and Theresa should specialize in the production of wheat.

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then a. the two countries' combined output of both goods will be higher than it would be in the absence of trade. b. Greece will produce more fish than it would produce in the absence of trade. c. Germany will produce more cars than it would produce in the absence of trade. d. All of the above are correct.

d. All of the above are correct.

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. ​ Minutes Needed to Number of Computers Set Up or Tested in a 40-Hour Week Set Up 1 ComputerTest 1 ComputerComputers Set UpComputers TestedBarb48?5040Jim30408060 Refer to Table 3-28. Barb has an absolute advantage in

neither setting up nor testing computers and a comparative advantage in testing computers

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

novels

Figure 3-20 Canada's Production Possibilities FrontierMexico's Production Possibilities Frontier Refer to Figure 3-20. Canada's opportunity cost of one unit of Good X is

2 units of Good Y and Mexico's opportunity cost of one unit of Good X is 1/2 unit of Good Y.

Which of the following is not correct? a. The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. c. The gains from specialization and trade are based not on comparative advantage but on absolute advantage. d. The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.

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

Table 3-35 Labor Hours Neededto Produce 1 Dozen Eggs 1 Pound Ham Denmark 10 8 Finland 6 4 Refer to Table 3-35. Which good(s) does Denmark have an absolute advantage producing?

neither ham nor eggs

The production possibilities frontier illustrates

the maximum combinations of goods and services that can be produced.

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

face a constant trade-off between producing pitchers of lemonade and pizzas.