Economics Chapter 3

Refer to the Figure . Germany would incur an opportunity cost of 6 units of Good X if it increase its production of Good Y by

12 units

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

15 units of cheese and 6 units of wine

Suppose that a worker in Tabletland can produce either 4 tablets or 1 television per year, and a worker in Ledville can produce either 2 tablets or 4 televisions per year. Each nation has 50 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Tabletland trades 50 tablets to Ledville in exchange for 50 televisions each year, then each country's maximum consumption of new tablets and televisions per year will be

150 tablets, 50 televisions in Tabletland and 50 tablets, 150 televisions in Ledville.

Refer to the Figure. If the production possibilities frontier shown is for two months of production, then which of the following combinations of beans and avocados could Mexico produce in two months?

2 avocados, 160 beans

Refer to the Figure . Germany's opportunity cost of one unit of Good X is

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

Refer to the Table . Assume that Brian and Tabitha each has 120 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is

20 bushels of apples and 10 pounds of pork.

Refer to the Figure. If the production possibilities frontier shown is for two months of production, then which of the following combinations of beans and avocados could Mexico not produce in two months?

3 avocados, 140 beans

Suppose that a worker in Shipville can produce either 5 units of oats or 20 pounds of tuna per year, and a worker in Grainland can produce either 20 units of oats or 5 pounds of tuna per year. There are 20 workers in each country. No trade occurs between the two countries. Shipville produces and consumes 50 units of oats and 200 pounds of tuna per year while Grainland produces and consumes 200 units of oats and 50 pound of tuna per year. If trade were to occur, Shipville would trade 60 pounds of tuna for 60 units of oats. If Shipville now completely specializes in tuna production, how many pounds of tuna could it now consume along with the 60 units of imported oats?

340 pounds.

Refer to the Table. Which of the following combinations of cheese and wine could France not produce in 40 hours?

4 units of cheese and 6 units of wine

Refer to the Figure . Alan's opportunity cost of one muffin is ______ and Diana's opportunity cost of one muffin is ______.

4/3 scones; 2 scones

England needs 1 hour to produce 1 unit of cheese or 5 units of wine. England can produce 40 units of cheese and 8 units of wine for every 40 hours of work. France needs 8 hours to produce 1 unit of cheese and 2 hours to produce 2 units of wine. In 40 hours France can produce 5 units of cheese and 20 units of wine. Refer to the information above. Assume that England and France each has 40 labor hours available. Before specialization and trade each country divides its time equally between the production of cheese and wine. Then, both countries decide they could be better off if they specialized in the production of one good and traded with each other. If England specializes in cheese and France specializes in wine and the countries trade 10 units of cheese for 8 units of wine, England's gains from trade will be

40 units of cheese and 20 units of wine.

Refer to the figure. Adam and Deirdre decide they could both be better off if they specialized in the production of one good and traded with each other. If Adam specializes in burritos and Deirdre specializes in tacos, then the total production is

400 tacos and 400 burritos.

Refer to the Table. Which of the following combinations of cheese and wine could England produce in 40 hours?

5 units of cheese and 7 units of wine

Refer to the Table . What is Brian's opportunity cost of producing one pound of pork?

6/5 bushels of apples

Refer to the Figure. If Luigi and Maria both spend all of their time producing meatballs, then total production is

700 meatballs and 0 pizzas

Refer to the Figure. If Adam and Deirdre both spend all of their time producing tacos, then total production is

800 tacos and 0 burritos

Which of the following statements about comparative advantage is not true?

A country cannot have a comparative advantage in producing a good unless it has an absolute advantage in producing that good

Which of the following statements about comparative advantage is not true?

A country cannot have a comparative advantage in producing a good unless it has an absolute advantage in producing that good.

Which of the following statements about comparative advantage is not true?.

A country cannot have a comparative advantage in producing a good unless it has an absolute advantage in producing that good.

Refer to the Figure . Which of the following is not correct?

Alan and Diana could each consume 150 muffins and 150 scones with trade.

Refer to the Figure. If point A represents Anne's current production and point B represents Brianna's current production, under what circumstances can both Anne and Brianna benefit from specialization and trade?

Anne produces more lemonade and Brianna produces more pizzas.

Luke and Carol are two toymakers who both produce trains and cars. In one month, Luke can produce 5 trains or 20 cars, whereas Carol can produce 8 trains or 24 cars. Given this, we know that

Carol has an absolute advantage in cars.

Both Denis and Carol produce cupcakes and cookies. If Denis's opportunity cost of 1 cupcake is 3 cookies and Carol's opportunity cost of 1 cupcake is 4 cookies, then

Denis has a comparative advantage in the production of cupcakes.

Point A represents Anne's current production and point B represents Brianna's current production. True or False: In order to benefit from specialization and trade, Anne should produce more pizza and Brianna should produce more lemonade.

False

Trade does not allow for specialization.

False

True or False:Economists use the term absolute advantage when describing the opportunity cost of two producers.

False

Refer to the Figure . Germany has a comparative advantage in the production of

Good Y and Spain has a comparative advantage in the production of Good X.

Refer to the Figure . Germany has an absolute advantage in the production of

Good Y and Spain has an absolute advantage in the production of Good X.

Suppose Jake and Tim can both produce two goods: football helmets and baseball bats. Which of the following is not possible?

Jake has a comparative advantage in the production of football helmets and in the production of baseball hats.

If Jeff can produce more cookies in one day than Josie can produce in one day, then

Jeff has an absolute advantage in the production of cookies.

Suppose that a worker in Wheatville can grow either 50 bushels of wheat or 10 bushels of oats per year, and a worker in Oatland can grow either 25 bushels of wheat or 5 bushels of oats per year. There are 15 workers in Wheatville and 15 workers in Oatland. Which of the following statements is true?

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

Suppose Maria and Nikki can produce ballet shoes. If Maria's opportunity cost of producing ballet shoes is higher than Nikki's opportunity cost of producing ballet shoes, then

Nikki has a comparative advantage in the production of ballet shoes.

Suppose Jessica can wash six windows per hour or she can iron twelve shirts per hour. Peter can wash four windows per hour or he can iron ten shirts per hour. Which of the following is not true?

Peter has an absolute advantage over Jessica in ironing shirts.

Assume that Sweden has a comparative advantage in chocolate and Italy has a comparative advantage in wine. Also assume that Sweden has an absolute advantage in both chocolate and wine. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

Sweden will produce more chocolate than it would produce in the absence of trade.

Which of the following would not result from all countries specializing according to the principle of comparative advantage?

The production possibilities frontier for each country would shift inward.

Which of the following statements is not correct?

Trade does not allow for specialization.

Trevor can shovel a driveway in two hours or he can plow a parking lot in 30 minutes. Paul can shovel a driveway in one hour or he can plow a parking lot in one hour. Given this we know that

Trevor has an absolute advantage in plowing a parking lot.

Trevor can shovel a driveway in two hours or he can plow a parking lot in 30 minutes. Paul can shovel a driveway in one hour or he can plow a parking lot in one hour. Given this we know that...

Trevor has an absolute advantage in plowing a parking lot.

Comparative advantage is the driving force of specialization.

True

Trade allows nations to consume outside of their production possibilities curves.

True

Trade has the potential to benefit all nations.

True

True or False: When the economy is self-sufficient, an economy's production possibilities frontier is also its consumption possibilities frontier.

True

When the economy is self-sufficient, an economy's production possibilities frontier is also its consumption possibilities frontier.

True

The principle of comparative advantage does not provide answers to certain questions. One of those questions is...

What determines the price at which trade takes place?

Imports are goods produced _____ and sold ________.

abroad; domestically

Exports are goods produced _____ and sold ________.

domestically; abroad

Economists use the term absolute advantage when describing the opportunity cost of two producers.

false

The production possibilities frontier illustrates the combinations of output that an economy should produce.

false

Refer to the Figure . Alan should specialize in the production of

muffins and Diana should specialize in the production of scones.

Refer to the Table . Brian should specialize in the production of

pork and Tabitha should specialize in the production of apples.

Absolute Advantage is:

the ability to produce more output from given inputs than another producer can.

China and Japan both produce clothing and computers. China is said to have the comparative advantage in producing clothing if

the opportunity cost of producing clothing is lower for China than it is for Japan

Refer to the Table. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring cheese along the horizontal axis, then

the slope of England's production possibilities frontier would be -0.2 and the slope of France's production possibilities frontier would be -4.

Refer to the Table. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring wine along the horizontal axis, then

the slope of England's production possibilities frontier would be -5 and the slope of France's production possibilities frontier would be -0.25.

When the economy is self-sufficient, an economy's production possibilities frontier is also its consumption possibilities frontier.

true