Study Guide Exam 1 Chapter 3

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)

If Tanek and Barb both spend all of their time producing burritos, then total production is

0 tacos and 500 burritos.

At which of the following prices would both Cuba and Denmark gain from trade with each other?

1 radio for 4 coolers

Assume that Cuba and Denmark each has 6 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

36

Which of the following combinations of bread and lemonade could France produce in 20 hours?

4 units of bread and 10 units of lemonade

Suppose that a worker in Radioland can produce either 5 radios or 1 television per year, and a worker in Teeveeland can produce either 1 radios or 5 televisions per year. Each nation has 100 workers. Also, suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 50 radios to Teeveeland in exchange for 50 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

450 radios, 50 televisions in Radioland and 50 radios, 450 televisions in Teeveeland.

If point A represents Alvina's production and point B represents Jane's production,

Alvina produces 200 pitchers of lemonade and 100 pizzas while Jane produces 180 pitchers of lemonade and 180 pizzas.

If China is capable of producing either shoes or toy trains or some combination of the two, then

China's opportunity cost of shoes is the inverse of its opportunity cost of toy trains.

Which of the following statements about comparative advantage is not true?

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.

Which of the following represents Zimbabwe's and Portugal's production possibilities frontiers when each country has 60 minutes of machine time available?

D

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

How are the gains from trade shared among the parties to a trade?

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

Mike has an absolute advantage in the production of donuts.

Consider two individuals, Tanek and Kalene each of whom knits sweaters and makes hotdogs, respectively. The gains from trade between Tanek and Kalene are most obvious in which of the following cases?

Tanek's skills are such that he can only knit sweaters, and Kalene's skills are such that she can only make hotdogs.

Which of the following is not correct?

The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

Trade can make everybody better off because it

allows people to specialize according to comparative advantage.

Both Ryan and Sachi produce ankle bracelets and rings. However, Ryan is better at producing both goods. In this case, trade could

benefit both Sachi and Ryan

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.

Both Alvina and Jane

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

By definition, exports are

goods produced domestically and sold abroad.

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico.

Absolute advantage is found by comparing different producers'

input requirements per unit of output.

As a student, Jordyn spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Jordyn's production possibilities frontier is a straight line if

she can switch between writing term papers and completing homework assignments at a constant rate.