Macro HW 3

Refer to Table 3-11. 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

Refer to Table 3-2. Which of the following combinations of cheese and wine could France produce in 40 hours? Table 3-2

6 units of cheese and 5 units of wine

Refer to Table 3-10. What is Brad's opportunity cost of producing one pound of beef?

6/5 bushels of wheat

Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)

Refer to Table 3-11. Jamaica's opportunity cost of one cooler is

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

Refer to Table 3-11. At which of the following prices would both Jamaica and Norway gain from trade with each other? Table 3-11 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate.

1 radio for 4 coolers

Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one pound of cashews?

1/10 hour

Refer to Figure 3-3. If the production possibilities frontier shown for Arturo is for 100 hours of production, then how long does it take Arturo to make one burrito?

1/3 hour

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

1/6 table for Ken and 1/3 table for Traci.

Refer to Table 3-8. If the production possibilities frontier is a straight line, then which of the following could represent the number of coats produced when 12 blankets are produced?

400

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 3-8. If the production possibilities frontier is bowed outward, then which of the following could represent the number of coats produced when 12 blankets are produced?

500

Refer to Figure 3-4. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade?

Alice produces more lemonade and Betty produces more pizzas.

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

C. Radios at 20 coolers at 50 w a linear line

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

False

Refer to Figure 3-1. The rate of trade-off between producing chairs and producing couches depends on how many chairs and couches are being produced in

Graph A only *curved line

The rate of trade-off between producing chairs and producing couches is constant in

Graph B only *linear line

The most obvious benefit of specialization and trade is that they allow us to

consume more goods than we otherwise would be able to consume.

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.

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

Differences in opportunity cost allow for gains from trade.

true

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

true

Specialization and trade can make everyone better off if a person can obtain goods at prices that are less than that person's opportunity cost.

true

Refer to Table 3-12. Indonesia's opportunity cost of producing bananas is

2.5 units of rice. This is higher than India's opportunity cost of producing bananas.

Refer to Table 3-11. 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 coolers increased by

24

Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one pound of peanuts?

3 hours

Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil produce in two months?

3 pounds of peanuts and 150 pounds of cashews

Refer to Figure 3-3. Arturo's opportunity cost of one burrito is

4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos.

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn.

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Shawn has an absolute advantage in the production of donuts.

Refer to Table 3-4. Which of the following represents Zimbabwe's and Portugal's production possibilities frontiers when each country has 60 minutes of machine time available?

Z- 6 on the y 20 on the x, P- 10 on the y 12 on the x

Trade between countries

allows each country to consume at a point outside its production possibilities frontier.

Ryan produces hair clips and earrings. Celia also produces hair clips and earrings, but Ryan is better at producing both goods. In this case, trade could

benefit both Celia and Ryan.

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.

Refer to Figure 3-4. Both Alice and Betty

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

Adam Smith developed the theory of comparative advantage as we know it today.

false

If a country has the comparative advantage in producing a product, then that country must also have the absolute advantage in producing that product.

false

Some countries win in international trade, while other countries lose.

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.

Absolute advantage is found by comparing different producers'

input requirements per unit of output.

A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his

production possibilities frontier.

A production possibilities frontier is bowed outward when

the rate of trade-off between the two goods being produced depends on how much of each good is being produced.