MicroEcon Chapter 3

c. 400

1 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? a. 200 b. 300 c. 400 d. 500

b. imports.

10 Goods produced abroad and sold domestically are called a. exports. b. imports. c. exchange rates. d. opportunity costs.

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

11 Trade between countries a. allows each country to consume at a point outside its production possibilities frontier. b. limits a country's ability to produce goods and services on its own. c. must benefit both countries equally; otherwise, trade is not mutually beneficial. d. can best be understood by examining the countries' absolute advantages.

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

12 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Table: Output Produced in One Day Refer to the table. Jamaica's opportunity cost of one cooler is a. 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios. b. 0.5 radios, and Norway's opportunity cost of one cooler is 8 radios. c. 2 radios, and Norway's opportunity cost of one cooler is 0.125 radios. d. 2 radios, and Norway's opportunity cost of one cooler is 8 radios.

b. 24.

13 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Table: Output Produced in One Day Refer to the table. 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 a. 12. b. 24. c. 36. d. 48.

b. 6.

14 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Table: Output Produced in One Day Coolers Radios Refer to the table. 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 a. 3. b. 6. c. 9. d. 12.

b. 1 radio for 4 coolers

15 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Table: Output Produced in One Day Coolers Radios Refer to the table. At which of the following prices would both Jamaica and Norway gain from trade with each other? a. 1 radio for 1 cooler b. 1 radio for 4 coolers c. 1 radio for 10 coolers d. 1 radio for 15 coolers

c. 2 coolers.

16 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Table: Output Produced in One Day Coolers Radios Refer to the table. Jamaica and Norway would not be able to gain from trade if Norway's opportunity cost of one radio changed to a. 0 coolers. b. 1 cooler. c. 2 coolers. d. Jamaica and Norway can always gain from trade regardless of their opportunity costs.

a. their opportunity cost of mowing their lawn is higher than the cost of paying someone to mow it for them.

17 A popular celebrity that is paid highly for their time should probably not mow their own lawn because a. their opportunity cost of mowing their lawn is higher than the cost of paying someone to mow it for them. b. they have a comparative advantage in mowing their lawn relative to a landscaping service. c. they have an absolute advantage in mowing their lawn relative to a landscaping service. d. they might sprain their ankle.

c. 3 hours

2 Refer to the figure. 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? a. 1/10 hour b. 1/3 hour c. 3 hours d. 10 hours

a. 1/10 hour

3 Refer to the figure. 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? a. 1/10 hour b. 1/3 hour c. 3 hours d. 10 hours

c. 400 pitchers per day.

4 Refer to the figure. Specializing only in lemonade, Alice can produce a. 200 pitchers per day. b. 300 pitchers per day. c. 400 pitchers per day. d. 450 pitchers per day.

d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

5 If Korea is capable of producing either shoes or soccer balls or some combination of the two, then a. Korea should specialize in the product in which it has an absolute advantage. b. it would be impossible for Korea to have an absolute advantage over another country in both products. c. it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods. d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

c. has an absolute advantage in the production of that good.

6 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, a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. b. has a comparative advantage in the production of that good. c. has an absolute advantage in the production of that good. d. should be the only producer of that good.

c. Shawn has an absolute advantage in the production of donuts.

7 If Shawn can produce more donuts in one day than Sue can produce in one day, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. c. Shawn has an absolute advantage in the production of donuts. d. Sue has an absolute advantage in the production of donuts.

a. Iowa has a comparative advantage in the production of corn.

8 If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then a. Iowa has a comparative advantage in the production of corn. b. Iowa has an absolute advantage in the production of corn. c. Iowa should import corn from Oklahoma. d. Oklahoma should produce just enough corn to satisfy its own residents' demands.

b. each person spends more time producing that product in which they have a comparative advantage.

9 Total output in an economy increases when each person specializes because a. there is less competition for the same resources. b. each person spends more time producing that product in which they have a comparative advantage. c. a wider variety of products will be produced within each country due to specialization. d. government necessarily plays a larger role in the economy due to specialization.