Economics 304 Chapter 3

Refer to Figure 3-16. Hosne's opportunity cost of one purse is A. 4/5 wallet and Merve's opportunity cost of one purse is 2/3 wallet. B. 4/5 wallet and Merve's opportunity cost of one purse is 3/2 wallets. C. 5/4 wallets and Merve's opportunity cost of one purse is 2/3 wallet. D. 5/4 wallets and Merve's opportunity cost of one purse is 3/2 wallets.

A. 4/5 wallet and Merve's opportunity cost of one purse is 2/3 wallet.

Refer to Figure 3-20. At which of the following prices would both Canada and Mexico gain from trade with each other? A. 9 units of Good Y for 6 units of Good X B. 8 units of Good Y for 20 units of Good X C. 70 units of Good Y for 30 units of Good X D. Canada and Mexico could not both gain from trade with each other at any price.

A. 9 units of Good Y for 6 units of Good X

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. If Chris and Tony both decide to specialize and produce only the good in which they have a comparative advantage, then A. Chris will produce only sauce and Tony will produce only tomatoes. B. Chris will produce only tomatoes and Tony will produce only sauce. C. Both Chris and Tony will produce only sauce. D. Both Chris and Tony will produce only tomatoes.

A. Chris will produce only sauce and Tony will produce only tomatoes.

Refer to Figure 3-16. Hosne has a comparative advantage in the production of A. purses and Merve has a comparative advantage in the production of wallets. B. wallets and Merve has a comparative advantage in the production of purses. C. both goods and Merve has a comparative advantage in the production of neither good. D. neither good and Merve has a comparative advantage in the production of both goods.

A. purses and Merve has a comparative advantage in the production of wallets.

Refer to Table 3-32 The opportunity costs for the US and France are as follows: A. In the US 1 million gallons of wine costs 1/2 million pounds of cheese and in France 1 million gallons of wine costs 2 million pounds of cheese. B. In the US 1 million gallons of wine costs 2 million pounds of cheese and in France 1 million gallons of wine costs 1/2 million pounds of cheese. C. In the US 1 million pounds of cheese costs 1/2 million gallons of wine and in France 1 million pounds of cheese costs 2 million gallons of wine. D. In the US 1 million pounds of cheese costs 16 million gallons of wine and in France 1 million pounds of cheese costs 8 million gallons of wine.

B. In the US 1 million gallons of wine costs 2 million pounds of cheese and in France 1 million gallons of wine costs 1/2 million pounds of cheese.

Refer to Table 3-32 The US has a comparative advantage in the production of A. wine. B. cheese. C. both wine and cheese. D. neither wine nor cheese.

B. cheese.

Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each other? A. 5 wallets for 1.25 purses B. 5 wallets for 2.5 purses C. 5 wallets for 3.75 purses D. Hosne and Merve could not both gain from trade with each other at any price.

C. 5 wallets for 3.75 purses

Refer to Figure 3-16. Hosne's opportunity cost of one wallet is A. 4/5 purse and Merve's opportunity cost of one wallet is 2/3 purse. B. 4/5 purse and Merve's opportunity cost of one wallet is 3/2 purse. C. 5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse. D. 5/4 purses and Merve's opportunity cost of one wallet is 3/2 purses.

C. 5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse.

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? A. Tony has a comparative advantage in the production of sauce. B. Chris has a comparative advantage in the production of tomatoes. C. Tony has an absolute advantage in the production of tomatoes. D. Chris has an absolute advantage in the production of tomatoes.

C. Tony has an absolute advantage in the production of tomatoes.

Refer to Figure 3-16. Hosne has an absolute advantage in the production of A. purses and Merve has an absolute advantage in the production of wallets. B. wallets and Merve has an absolute advantage in the production of purses. C. both goods and Merve has an absolute advantage in the production of neither good. D. neither good and Merve has an absolute advantage in the production of both goods.

C. both goods and Merve has an absolute advantage in the production of neither good.

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. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is A. 2 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 3 jars of sauce. B. 3 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 2 jars of sauce. C. 20 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 30 jars of sauce. D. 30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.

D. 30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.

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 prices would result in a mutually advantageous trade between Chris and Tony? A. 1 lb. of tomatoes for 23 jars of sauce B. 1 lb. of tomatoes for 27 jars of sauce C. 1 lb. of tomatoes for 33 jars of sauce D. Both a and b are correct.

D. Both a and b are correct.

By definition, imports are A. people who work in foreign countries. B. goods in which a country has an absolute advantage. C. limits placed on the quantity of goods leaving a country. D. goods produced abroad and sold domestically.

D. goods produced abroad and sold domestically.

By definition, exports are A. limits placed on the quantity of goods brought into a country. B. goods in which a country has an absolute advantage. C. people who work in foreign countries. D. goods produced domestically and sold abroad.

D. goods produced domestically and sold abroad.

Refer to Table 3-32 France has an absolute advantage in the production of A. wine. B. cheese. C. both wine and cheese. D. neither wine nor cheese.

D. neither wine nor cheese.