Micro Chapter 3 study questions

Refer to Table 3-5. If England and Spain trade based on the principle of comparative advantage, Spain will export which product to England?

cheese

Absolute advantage is found by

comparing the productivity of one nation to that of another.

The producer that can produce a product with lower opportunity cost

has a comparative advantage in the production of that good.

Refer to Table 3-4. If Japan and the United States trade based on the principle of comparative advantage,

some individuals within each society will be made worse off.

Using all available resources, if a farmer can produce either 85 cantaloupes or 70 watermelons, then the opportunity cost of 1 cantaloupe to the farmer would be

.82 watermelons.

Refer to Figure 3-2. Ben and Jerry were currently both producing at point A on their production possibilities frontier and then Ben decided he would be willing to trade 4 pounds of cones to get 2 pounds of ice cream from Jerry. If both decided to specialize in what they had a comparative advantage in and trade, the gains from trade would be

1 pound of ice cream for Ben and 1 pound of cones for Jerry.

Refer to Table 3-5. The opportunity cost of 1 unit of cheese in England is

1/2 bread.

Refer to Table 3-3. The opportunity cost of 1 birdhouse for Montana is

1/3 basket.

Refer to Figure 3-2. For Ben the opportunity cost of 1 pound of cones is

1/4 pound of ice cream.

Refer to Table 3-2. The opportunity cost of 1 dress for Carolyn is

1/5 quilt.

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 10 workers in each country. Political pressure from the fish lobby in Farmland and the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland. As a result, Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year. If the political pressure were overcome and trade were to occur, each country would completely specialize in the product for which it has a comparative advantage. If trade were to occur, by how much would the combined output of the two countries increase?

100 wheat and 100 fish.

Refer to Figure 3-4. If Barney and Betty both specialize in the good in which they have a comparative advantage, total production of bread will be

20 and total production of pies will be 14.

Refer to Table 3-3. The opportunity cost of 1 basket for Montana is

3 birdhouses.

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good for which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

300 televisions and 100 radios in Teeveeland and 300 radios and 100 televisions in Radioland.

Refer to Table 3-4. The opportunity cost of 1 car for the United States is

4 airplanes.

Refer to Figure 3-4. The opportunity cost of 1 pie for Betty is

4/3 loaves of bread.

Which of the following would NOT occur if each person specializes in the good for which they have a comparative advantage?

Each person's production possibilities frontier will shift outward.

If Karl Malone (1997 NBA MVP) is a better basketball player and truck driver than Gregory Mankiw (the author of your economics text), which of the following is true?

Karl Malone and Gregory Mankiw may benefit from trade.

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that

Mike has an absolute advantage in chairs.

A tax placed on imported goods is called

a tarriff

Refer to Table 3-4. Japan has an absolute advantage in

airplanes and the United States has a comparative advantage in cars.

Refer to Figure 3-3. Ginger has a comparative advantage in

ballet slippers and Fred has a comparative advantage in tap shoes.

Refer to Figure 3-3. Ginger has an absolute advantage in

ballet slippers and Fred has a comparative advantage in tap shoes.

Refer to Figure 3-3. Ginger should specialize in

ballet slippers and Fred should specialize in tap shoes.

Refer to Table 3-2. Helen has a comparative advantage in

both goods and Fred has a comparative advantage in neither good.

Refer to Table 3-5. If England and Spain trade based on the principle of comparative advantage, England will export

bread and Spain will export cheese.

Refer to Table 3-4. If the United States and Japan trade based on the principle of comparative advantage, the United States will export what product to Japan?

cars

Refer to Table 3-4. If the United States and Japan trade based on the principle of comparative advantage, the United States will export

cars and Japan will export airplanes

Refer to Figure 3-2. Ben has a comparative advantage in

cones and Jerry has a comparative advantage in ice cream.

Refer to Figure 3-2. Ben has a comparative advantage in

cones and Jerry has an absolute advantage in ice cream

Refer to Figure 3-2. Ben has an absolute advantage in

cones and Jerry has an absolute advantage in ice cream.

People who provide you with goods and services

do so because they get something in return.

Refer to Table 3-2. Helen and Carolyn both could benefit by Helen specializing in

neither good and Carolyn has a comparative advantage in both goods.

Refer to Figure 3-3. Fred should produce

only tap shoes.

The term which means whatever must be given up to obtain an item is

opportunity cost.

Comparative advantage is based on

opportunity costs.

David Ricardo, a millionaire stockbroker and economist

opposed the Corn Laws as a member of Parliament.

Refer to Table 3-1. The Farmer has an absolute advantage in

potatoes, and the Rancher has a comparative advantage in meat.

Refer to Table 3-1. The Farmer has an absolute advantage in

potatoes, and the Rancher has an absolute advantage in meat

The country that has a comparative advantage in a product

should export that product.