Ch 3

Refer to Figure 3-1. Assume both Paul and Cliff divide their time equally between the production of corn and wheat, and they do not trade. If they are the only producers of wheat and corn, then total production of wheat and corn is a. 8 bushels of wheat and 7 bushels of corn. b. 7 bushels of wheat and 6 bushels of corn. c. 6 bushels of wheat and 8 bushels of corn. d. 7 bushels of wheat and 7 bushels of corn.

d. 7 bushels of wheat and 7 bushels of corn.

Refer to Figure 3-2. Suppose Ben and Jerry have both decided to produce at point A on their respective production possibilities frontiers. We know that a. neither Ben's well-being nor Jerry's well-being could be improved as a result of trade between the two. b. trade between the two could benefit Ben but not Jerry. c. trade between the two could benefit Jerry but not Ben. d. Ben and Jerry are both allocating 1/2 of their time to the production of each good.

d. Ben and Jerry are both allocating 1/2 of their time to the production of each good.

Refer to Figure 3-2. For Jerry, the opportunity cost of 1 pound of cones is a. 1/3 pound of ice cream. b. 2/3 pound of ice cream. c. 3/2 pounds of ice cream. d. 2 pounds of ice cream.

b. 2/3 pound of ice cream.

Refer to Figure 3-2. For Ben, the opportunity cost of 1 pound of cones is a. 1/4 pound of ice cream. b. 1/2 pound of ice cream. c. 2 pounds of ice cream. d. 4 pounds of ice cream.

a. 1/4 pound of ice cream.

Refer to Figure 3-1. Which of the following statements is correct? a. Paul has an absolute advantage in both wheat and corn. b. Paul has an absolute advantage in wheat and Cliff has an absolute advantage in corn. c. Cliff has an absolute advantage in wheat and Paul has an absolute advantage in corn. d. Cliff has an absolute advantage in both wheat and corn.

a. Paul has an absolute advantage in both wheat and corn.

Refer to Figure 3-3. Ginger has an absolute advantage in a. ballet slippers and Fred has an absolute advantage in tap shoes. b. tap shoes and Fred has an absolute advantage in ballet slippers. c. neither good and Fred has an absolute advantage in both goods. d. both goods and Fred has an absolute advantage in neither good.

a. ballet slippers and Fred has an absolute advantage in tap shoes.

Refer to Figure 3-2. Ben has a comparative advantage in a. cones and Jerry has a comparative advantage in ice cream. b. ice cream and Jerry has a comparative advantage in cones. c. neither good and Jerry has a comparative advantage in both goods. d. both goods and Jerry has a comparative advantage in neither good.

a. cones and Jerry has a comparative advantage in ice cream.

Refer to Figure 3-1. The opportunity cost of 1 bushel of wheat for Cliff is a. 1/3 bushel of corn. b. 2/3 bushel of corn. c. 1 bushel of corn. d. 3/2 bushels of corn.

b. 2/3 bushel of corn.

Refer to Figure 3-1. The opportunity cost of 2 bushels of corn for Cliff is a. 2 bushels of wheat. b. 3 bushels of wheat. c. 6 bushels of wheat. d. 12 bushels of wheat.

b. 3 bushels of wheat.

Refer to Figure 3-5. For Country A, what is the opportunity cost of each additional car that it decides to produce? a. 25 bushels of corn b. 30 bushels of corn c. 35 bushels of corn d. 40 bushels of corn

b. 30 bushels of corn

Specialization and trade are closely linked to a. absolute advantage. b. comparative advantage. c. gains to some traders that exactly offset losses to other traders. d. shrinkage of the economic pie.

b. comparative advantage.

Refer to Figure 3-2. Ben has an absolute advantage in a. ice cream and Jerry has an absolute advantage in cones. b. cones and Jerry has an absolute advantage in ice cream. c. neither good and Jerry has an absolute advantage in both goods. d. both goods and Jerry has an absolute advantage in neither good.

b. cones and Jerry has an absolute advantage in ice cream.

Refer to Table 3-5. If the United States and Japan trade based on the principle of comparative advantage, the United States will a. export cars (but not airplanes) to Japan. b. export airplanes (but not cars) to Japan. c. export cars and airplanes to Japan. d. import cars and airplanes from Japan.

b. export airplanes (but not cars) to Japan.

The opportunity cost of an item is a. the number of hours that one must work in order to buy one unit of the item. b. what you give up to get that item. c. always less than the dollar value of the item. d. always greater than the cost of producing the item.

b. what you give up to get that item.

Refer to Figure 3-2. Suppose Jerry's production possibilities frontier is based on 4 hours of work. Jerry requires a. 1/4 hour to produce 1 pound of ice cream and 3/8 hour to produce 1 pound of cones. b. 1/2 hour to produce 1 pound of ice cream and 3/4 hour to produce 1 pound of cones. c. 1 hour to produce 1 pound of ice cream and 2/3 hour to produce 1 pound of cones. d. 1 hour to produce 1 pound of ice cream and 3/2 hours to produce 1 pound of cones.

c. 1 hour to produce 1 pound of ice cream and 2/3 hour to produce 1 pound of cones.

Refer to Figure 3-2. Suppose Ben's production possibilities frontier is based on 4 hours of work. How much time does Ben require to produce 1 pound of ice cream? a. 1/2 hour b. 1 hour c. 2 hours d. The answer cannot be determined from the given information.

c. 2 hours

Refer to Figure 3-2. For Jerry, the opportunity cost of 1 pound of ice cream is a. 1/3 pound of cones. b. 2/3 pound of cones. c. 3/2 pounds of cones. d. 2 pounds of cones.

c. 3/2 pounds of cones.

Refer to Figure 3-1. Which of the following statements is correct? a. Paul has a comparative advantage in both wheat and corn. b. Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn. c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn. d. Cliff has a comparative advantage in both wheat and corn.

c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn.

Refer to Figure 3-3. Ginger has a comparative advantage in a. tap shoes and Fred has a comparative advantage in ballet slippers. b. both goods and Fred has a comparative advantage in neither good. c. ballet slippers and Fred has a comparative advantage in tap shoes. d. neither good and Fred has a comparative advantage in both goods.

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

Refer to Figure 3-5. The graph that is shown is called a a. supply line. b. opportunity line. c. production possibilities frontier. d. consumption possibilities frontier.

c. production possibilities frontier.

Refer to Figure 3-5. Which of the following combinations of cars and corn could Country A produce in a given month? a. 7 cars and 40 bushels of corn b. 5 cars and 92 bushels of corn c. 3 cars and 165 bushels of corn d. 2 cars and 180 bushels of corn

d. 2 cars and 180 bushels of corn

Refer to Figure 3-1. Suppose Cliff must work 5 hours to produce each bushel of corn. Then Cliff's production possibilities frontier is based on how many hours of work? a. 0.2 hours b. 2.5 hours c. 15 hours d. 20 hours

d. 20 hours

Refer to Figure 3-1. Suppose Paul must work 2 hours to produce each bushel of corn. Then Paul's production possibilities frontier is based on how many hours of work? a. 0.2 hours b. 5 hours c. 10 hours d. 20 hours

d. 20 hours

Refer to Figure 3-2. For Ben, the opportunity cost of 1 pound of ice cream is a. 1/14 pound of cones. b. 1/2 pound of cones. c. 2 pounds of cones. d. 4 pound of cones.

d. 4 pound of cones.

Refer to Table 3-5. The United States has an absolute advantage in a. airplanes and Japan has an absolute advantage in cars. b. cars and Japan has an absolute advantage in airplanes. c. both cars and airplanes. d. neither cars nor airplanes.

d. neither cars nor airplanes.