经济学原理 微观 第五版测试题库(03)

Chapter 3

Interdependence and the Gains from Trade

TRUE/FALSE1.

In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers.ANS: T DIF: 1 REF: 3-0 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Trade MSC: Definitional

2.

Interdependence among individuals and interdependence among nations are both based on the gains from

trade.ANS: T DIF: 2 REF: 3-0 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

3. If a person chooses self-sufficiency, then she can only consume what she produces.ANS: T DIF: 1 REF: 3-1 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Self-sufficiency MSC: Definitional

4.

If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then

Wrex cannot gain from trading math problems and book reports with Maxine.ANS: F DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

5.

It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to

produce every good than it takes German workers.ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

6.

A production possibilities frontier is a graph that shows the combination of outputs that an economy should

produce.ANS: F DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

7. Production possibilities frontiers cannot be used to illustrate tradeoffs.ANS: F DIF: 1 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Definitional

8.

An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at

points outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

9. Trade allows a country to consume outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier | Trade MSC: Interpretive

10. Opportunity cost refers to how many inputs a producer requires to produce a good.ANS: F DIF: 1 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Definitional

128

Chapter 3 /Interdependence and the Gains from Trade ? 129

11. Opportunity cost measures the trade-off between two goods that each producer faces.

ANS: T DIF: 1 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Definitional

12. For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity

cost of the other good.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Interpretive

13. Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost to

Henry of making a bird house is 1/3 bird feeder.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

14. Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Then Dewey’s

opportunity cost of producing one bushel of corn is 1/2 yard of cloth.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

15. Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can complete

an oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

16. Harry is a computer company executive, earning $200 per hour managing the company and promoting its

products. His daughter Quinn is a high school student, earning $6 per hour helping her grandmother on the farm. Harry's computer is broken. He can repair it himself in one hour. Quinn can repair it in 10 hours. Harry’s opportunity cost of repairing the computer is lower than Quinn’s.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

17. If one producer has the absolute advantage in the production of all goods, then that same producer will have

the comparative advantage in the production of all goods as well.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Interpretive

18. If a country has the comparative advantage in producing a product, then that country must also have the

absolute advantage in producing that product.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Interpretive

19. In an economy consisting of two people producing two goods, it is possible for one person to have the

absolute advantage and the comparative advantage in both goods.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Interpretive

20. If one producer is able to produce a good at a lower opportunity cost than some other producer, then the

producer with the lower opportunity cost is said to have an absolute advantage in the production of that good.ANS: F DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Definitional

130 ? Chapter 3 /Interdependence and the Gains from Trade

21. Unless two people who are producing two goods have exactly the same opportunity costs, then one person will

have a comparative advantage in one good, and the other person will have a comparative advantage in the other good.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

22. Zora can produce 4 quilts in a week and she can produce 1 corporate website in a week. Lou can produce 9

quilts in a week and he can produce 2 corporate websites in a week. Zora has the comparative advantage in quilts and the absolute advantage in neither good, while Lou has the comparative advantage in corporate websites and the absolute advantage in both goods.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

23. Timmy can edit 2 pages in one minute and he can type 80 words in one minute. Olivia can edit 1 page in one

minute and she can type 100 words in one minute. Timmy has an absolute advantage and a comparative advantage in editing, while Olivia has an absolute advantage and a comparative advantage in typing.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

24. Suppose Hank and Tony can both produce corn. If Hank’s opportunity cost of producing a bushel of corn is

2 bushels of soybeans and Tony’s opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

25. It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5

hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Applicative

26. The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone

will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

27. The gains from specialization and trade are based on absolute advantage.ANS: F DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Definitional

28. Trade can benefit everyone in society because it allows people to specialize in activities in which they have a

comparative advantage.ANS: T DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Definitional

29. Two countries can achieve gains from trade even if one country has an absolute advantage in the production of

both goods.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

Chapter 3 /Interdependence and the Gains from Trade ? 131

30. It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6

hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

31. Differences in opportunity cost allow for gains from trade.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

32. As long as two people have different opportunity costs, each can gain from trade with the other, since trade

allows each person to obtain a good at a price lower than his or her opportunity cost.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

33. Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because each

person specializes in the activity for which he or she has the lower opportunity cost.ANS: T DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

34. When each person specializes in producing the good in which he or she has a comparative advantage, each

person can gain from trade but total production in the economy is unchanged.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

35. For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two

opportunity costs.ANS: F DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

36. Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.ANS: T DIF: 1 REF: 3-2 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Economists MSC: Definitional

37. David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.ANS: T DIF: 1 REF: 3-2 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Economists MSC: Definitional

38. Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make

than to buy.ANS: T DIF: 1 REF: 3-2 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Economists MSC: Definitional

39. Adam Smith developed the theory of comparative advantage as we know it today.ANS: F DIF: 1 REF: 3-2 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Economists | Comparative advantage MSC: Definitional

132 ? Chapter 3 /Interdependence and the Gains from Trade

40. Goods produced abroad and sold domestically are called exports and goods produced domestically and sold

abroad are called imports.ANS: F DIF: 1 REF: 3-3 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Exports | Imports MSC: Definitional

41. International trade may make some individuals in a nation better off, while other individuals are made worse

off.ANS: T DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

42. For international trade to benefit a country, it must benefit all citizens of that country.ANS: F DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

43. Some countries win in international trade, while other countries lose.ANS: F DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

44. Trade can make some individuals worse off, even as it makes the country as a whole better off.ANS: T DIF: 1 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Definitional

45. Trade allows all countries to achieve greater prosperity.ANS: T DIF: 1 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Definitional

SHORT ANSWER1.

Explain the difference between absolute advantage and comparative advantage. Which is more important in

determining trade patterns, absolute advantage or comparative advantage? Why?ANS:

Absolute advantage refers to productivity, as in the producer who can produce a product at a lower cost in terms of the resources used in production. Comparative advantage refers to the producer who can produce a product at a lower opportunity cost. Comparative advantage is the principle upon which trade patterns are based. Comparative advantage is based on opportunity cost, and opportunity cost measures the real cost to an individual or country of producing a particular product. Opportunity cost is therefore the information necessary for an individual or nation to determine whether to produce a good or buy it from someone else.

DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage | Trade

MSC: Interpretive

Chapter 3 /Interdependence and the Gains from Trade ? 133

2.

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.

Omega’s Production Possibilities Frontier

popcorn300275250225200175150125100755025255075100125150175200225250peanuts255075100125150175200225peanutspopcorn300275250225200175150125100755025Alpha’s Production Possibilities Frontier

a.

Assume that each country decides to use half of its resources in the production of each good.

Show these points on the graphs for each country as point A.

b. If these countries choose not to trade, what would be the total world production of popcorn and

peanuts?

c. Now suppose that each country decides to specialize in the good in which each has a

comparative advantage. By specializing, what is the total world production of each product now? d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the

graphs the gain each country would receive from trade. Label these points B.

ANS:

Alpha’s Production Possibilities Frontier

popcorn300275250225200175150125100755025255075100125150175200225250peanutsABOmega’s Production Possibilities Frontier

popcorn300275250225200175150ABConsumptionwith tradeConsumptionwith trade125100755025255075100125150175200225peanuts

134 ? Chapter 3 /Interdependence and the Gains from Trade

a.

Alpha would be producing 125 units of peanuts and 75 units of popcorn (point A on its production

possibilities frontier) and Omega would be producing 50 units of peanuts and 150 units of popcorn (point A on its production possibilities frontier).

b. The total world production of peanuts would be 175 units and the total world production of popcorn

would be 225 units.

c. The total world production of peanuts would now be 250 units and the total world production of

popcorn would now be 300 units.

d. Alpha would be producing 250 units of peanuts and would trade 100 of them to Omega, leaving

Alpha with 150 units of peanuts. Alpha would then receive 100 units of popcorn from Omega. Omega would be producing 300 units of popcorn and would trade 100 of them to Alpha, leaving Omega with 200 units of popcorn. Omega would then receive 100 units of peanuts from Alpha.

DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Production possibilities frontier | Gains from trade 3.

MSC: Applicative

Julia can fix a meal in 1 hour, and her opportunity cost of one hour is $50. Jacque can fix the same kind of meal in 2 hours, and his opportunity cost of one hour is $20. Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.ANS:

Since Julia's opportunity cost of preparing a meal is $50, and Jacque's opportunity cost of preparing a meal is $40, each of them will be better off by $5 per meal if this arrangement is made.

DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade MSC: Applicative

TOP: Gains from trade

4.

Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.

a. How much time would it take the two to complete the project if they divide the calculations equally and

the slides equally?

b. How much time would it take the two to complete the project if they use comparative advantage and

specialize in calculating or preparing slides?

c. If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each

to specialize in calculating or preparing slides?

ANS:

a. If both tasks are divided equally, it will take 11 hours for the calculations and 15 hours for the writing,

for a total of 26 hours.

b. If Diane specializes in calculating and Gary specializes in preparing slides, it will take 22 hours to

complete the project.

c. If Diane specializes in calculating, her opportunity cost will be $60; hence, Diane would be better off if

she paid Gary any amount less than $60 to do the calculating. Since Gary's opportunity cost of doing the calculations is only $50, he would be better off if Diane paid him between $50 and $60 dollars to do the calculations. In this case, the total time spent on the project would be 20 hours.

DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade MSC: Applicative

TOP: Gains from trade

Chapter 3 /Interdependence and the Gains from Trade ? 135

Sec00 - Interdependence and the Gains from Trade

MULTIPLE CHOICE1.

People who provide you with goods and services

a. are acting out of generosity.

b. do so because they get something in return. c. have chosen not to become interdependent. d. are required to do so by the government.

DIF: 1 REF: 3-0

LOC: Gains from trade, specialization and trade MSC: Definitional

ANS: B

NAT: Analytic TOP: Trade 2.

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

a. rely upon the government to provide us with the basic necessities of life. b. rely upon one another for the goods and services we consume. c. have similar tastes and abilities.

d. are concerned about one another’s well-being.

ANS: B DIF: 1 REF: 3-0 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Interdependence MSC: Definitional

Sec01 - Interdependence and the Gains from Trade - A Parable for the Modern Economy

MULTIPLE CHOICE1.

Which of the following is not a reason people choose to depend on others for goods and services? a. to improve their lives

b. to allow them to enjoy a greater variety of goods and services c. to consume more of each good without working any more hours

d. to allow people to produce outside their production possibilities frontiers

DIF: 2 REF: 3-1

LOC: Gains from trade, specialization and trade MSC: Interpretive

ANS: D

NAT: Analytic TOP: Trade 2.

When can two countries gain from trading two goods?

a. when the first country can only produce the first good and the second country can only produce the

second good

b. when the first country can produce both goods, but can only produce the second good at great cost,

and the second country can produce both goods, but can only produce the first good at great cost c. when the first country is better at producing both goods and the second country is worse at

producing both goods

d. Two countries could gain from trading two goods under all of the above conditions.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

3.

Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, but

Regan is better at producing both goods. In this case, trade could a. benefit both Jayson and Regan. b. benefit Jayson, but not Regan. c. benefit Regan, but not Jayson. d. benefit neither Jayson nor Regan.

ANS: A DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

136 ? Chapter 3 /Interdependence and the Gains from Trade 4.

Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. In

which of the following cases is it impossible for both Ben and Shawna to benefit from trade? a. Ben cannot knit sweaters and Shawna cannot bake bread.

b. Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters. c. Ben is better than Shawna at baking bread and at knitting sweaters. d. Both Ben and Shawna can benefit from trade in all of the above cases.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

5.

Shannon bakes cookies and Justin grows vegetables. In which of the following cases is it impossible for both

Shannon and Justin to benefit from trade?

a. Shannon does not like vegetables and Justin does not like cookies.

b. Shannon is better than Justin at baking cookies and Justin is better than Shannon at growing

vegetables.

c. Justin is better than Shannon at baking cookies and at growing vegetables. d. Both Shannon and Justin can benefit from trade in all of the above cases.

ANS: A DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

6.

The production possibilities frontier illustrates

a. the combinations of output that an economy should produce. b. the combinations of output that an economy should consume. c. the combinations of output that an economy can produce. d. All of the above are correct.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

7.

An economy’s production possibilities frontier is also its consumption possibilities frontier

a. under all circumstances. b. under no circumstances.

c. when the economy is self-sufficient.

d. when the rate of tradeoff between the two goods being produced is constant.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

8.

A production possibilities frontier is bowed outward when

a. the more resources the economy uses to produce one good, the fewer resources it has available to

produce the other good.

b. an economy is self-sufficient instead of interdependent and engaged in trade. c. the rate of tradeoff between the two goods being produced is constant.

d. the rate of tradeoff between the two goods being produced depends on how much of each good is

being produced.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

Chapter 3 /Interdependence and the Gains from Trade ? 137

9.

A production possibilities frontier is a straight line when

a. the more resources the economy uses to produce one good, the fewer resources it has available to

produce the other good.

b. an economy is interdependent and engaged in trade instead of self-sufficient. c. the rate of tradeoff between the two goods being produced is constant.

d. the rate of tradeoff between the two goods being produced depends on how much of each good is

being produced.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive

10. The following table contains some production possibilities for an economy for a given month.

Sweaters 4 6 8 Gloves 300 ? 100

If the production possibilities frontier is bowed outward, then “?” could be

a. 100. b. 150. c. 200. d. 250.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

11. The following table contains some production possibilities for an economy for a given month.

Sweaters 4 6 8

Gloves 300 ? 100 If the production possibilities frontier is a straight line, then “?” must be a. 100. b. 150. c. 200. d. 250.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

12. The following table contains some production possibilities for an economy for a given year.

Cars 10 12 14

Newspapers 400 360 ? If the production possibilities frontier is bowed outward, then “?” could be a. 340. b. 330. c. 320. d. 310.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

138 ? Chapter 3 /Interdependence and the Gains from Trade

13. The following table contains some production possibilities for an economy for a given year.

Cars 10 12 14

Newspapers 400 360 ? If the production possibilities frontier is a straight line, then “?” must be a. 340. b. 330. c. 320. d. 310.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

14. The following table contains some production possibilities for an economy for a given month.

Bagels 40 60 80

Donuts 150 ? 50 If the production possibilities frontier is bowed outward, then “?” could be a. 50. b. 75. c. 100. d. 125.

ANS: D DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

15. The following table contains some production possibilities for an economy for a given month.

Bagels 40 60 80

Donuts 150 ? 50 If the production possibilities frontier is a straight line, then “?” must be a. 50. b. 75. c. 100. d. 125.

ANS: C DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 139

Sec02 - Interdependence and the Gains from Trade - Comparative Advantage: The

Driving Force of Specialization

MULTIPLE CHOICE1.

Assume for the United States that the opportunity cost of each airplane is 100 cars. Then which of these pairs of points could be on the United States' production possibilities frontier? a. (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars) b. (200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars) c. (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars) d. (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)

ANS: C DIF: 3 REF: 3-2 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier | Opportunity cost MSC: Analytical2.

Assume for Namibia that the opportunity cost of each hut is 200 bowls. Then which of these pairs of points

could be on Namibia's production possibilities frontier? a. (200 huts, 30,000 bowls) and (150 huts, 35,000 bowls) b. (200 huts, 40,000 bowls) and (150 huts, 30,000 bowls) c. (300 huts, 50,000 bowl) and (200 huts, 60,000 bowls) d. (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls)

ANS: D DIF: 3 REF: 3-2 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier | Opportunity cost MSC: Analytical3.

What must be given up to obtain an item is called

a. out-of-pocket cost. b. comparative worth. c. opportunity cost. d. absolute value.

ANS: C DIF: 1 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Definitional

4.

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.

ANS: B DIF: 1 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Definitional

5.

A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other

information, it follows that the farmer’s opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton a. is equal to 0.

b. is between 0 and 1. c. is equal to 1. d. is greater than 1.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Interpretive

140 ? Chapter 3 /Interdependence and the Gains from Trade 6.

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.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

7.

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of

corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is a. 0.36 bushel of corn. b. 2.8 bushels of corn. c. 14 bushels of corn. d. 70 bushels of corn.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

8.

Suppose a gardener produces both green beans and corn in her garden. If the opportunity cost of one bushel

of corn is 3/5 bushel of green beans, then the opportunity cost of 1 bushel of green beans is a. 3/5 bushel of corn. b. 5/3 bushels of corn. c. 3 bushels of corn. d. 5 bushels of corn.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

9.

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 the opportunity cost of 1 chair is

a. 1/5 table for Mike and 1/3 table for Sandy. b. 1/5 table for Mike and 3 tables for Sandy. c. 5 tables for Mike and 1/3 table for Sandy. d. 5 tables for Mike and 3 tables for Sandy.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

10. 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 the opportunity cost of 1 table is

a. 1/5 chair for Mike and 1/3 chair for Sandy. b. 1/5 chair for Mike and 3 chairs for Sandy. c. 5 chairs for Mike and 1/3 chair for Sandy. d. 5 chairs for Mike and 3 chairs for Sandy.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 141

11. If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes.

If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

a. if he devotes all of his available resources to watermelon production, then he can produce 80

watermelons.

b. he cannot have a comparative advantage over other farmers in producing cantaloupes. c. his opportunity cost of one watermelon is 2/3 of a cantaloupe. d. his production possibilities frontier is bowed-out.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

12. Absolute advantage is found by comparing different producers’

a. opportunity costs.

b. payments to land, labor, and capital. c. input requirements per unit of output. d. locational and logistical circumstances.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage MSC: Interpretive

13. 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.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage MSC: Interpretive

14. 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.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage MSC: Applicative

15. Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4

tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that a. Mike has an absolute advantage in chairs. b. Mike has a comparative advantage in tables. c. Sandy has an absolute advantage in chairs. d. Sandy has a comparative advantage in chairs.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage MSC: Applicative

16. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three

hours or he can trim a tree in two hours.

a. Travis has an absolute advantage over Ricardo in trimming trees. b. Travis has a comparative advantage over Ricardo in mowing lawns. c. Ricardo has a comparative advantage over Travis in trimming trees. d. All of the above are correct.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage MSC: Applicative

142 ? Chapter 3 /Interdependence and the Gains from Trade

17. Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two

windows per hour or he can iron five shirts per hour.

a. Susan has an absolute advantage over Paul in washing windows. b. Susan has a comparative advantage over Paul in washing windows. c. Paul has a comparative advantage over Susan in ironing shirts. d. All of the above are correct.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

18. Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following

is not possible?

a. Jim has an absolute advantage in the production of baseball bats and in the production of hockey

sticks.

b. Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the

production of hockey sticks.

c. Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in

the production of baseball bats.

d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey

sticks.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

19. Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is

not possible?

a. Kelly has a comparative advantage in repairing cars and David has a comparative advantage in

cooking meals.

b. Kelly has an absolute advantage in repairing cars and David has an absolute advantage in cooking

meals.

c. Kelly has a comparative advantage in repairing cars and in cooking meals. d. David has an absolute advantage in repairing cars and in cooking meals.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

20. Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity cost of producing baseball bats is

lower than Tom’s opportunity cost of producing baseball bats, then

a. Tom must have an absolute advantage in the production of baseball bats. b. Jim must have an absolute advantage in the production of baseball bats. c. Tom has a comparative advantage in the production of baseball bats. d. Jim has a comparative advantage in the production of baseball bats.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

21. If Shawn can produce donuts at a lower opportunity cost than Sue, 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 should not produce donuts.

d. Shawn is capable of producing more donuts than Sue in a given amount of time.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 143

22. 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.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

23. Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative

advantage in producing wheat if

a. Canada requires fewer resources than the U.S. to produce a bushel of wheat.

b. the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S. c. the opportunity cost of producing a bushel of wheat is lower for the U.S. than it is for Canada. d. the U.S. has an absolute advantage over Canada in producing computer software.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Applicative

24. Comparative advantage is related most closely to which of the following?

a. output per hour b. opportunity cost c. efficiency

d. bargaining strength in international trade

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

25. For two individuals who engage in the same two productive activities, it is impossible for one of the two

individuals to

a. have a comparative advantage in both activities. b. have an absolute advantage in both activities.

c. be more productive per unit of time in both activities. d. gain from trade with each other.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

26. Two individuals engage in the same two productive activities. In which of the following circumstances

would neither individual have a comparative advantage in either activity?

a. One individual’s production possibilities frontier is steeper than the other individual’s production

possibilities frontier.

b. One individual is faster at both activities than the other individual.

c. One individual’s opportunity costs are the same as the other individual’s opportunity costs.

d. None of the above is correct; one of the two individuals always will have a comparative advantage

in at least one of the two activities.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

144 ? Chapter 3 /Interdependence and the Gains from Trade

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

a. Comparative advantage is determined by which person or group of persons can produce a given

quantity of a good using the fewest resources.

b. The principle of comparative advantage applies to countries as well as to individuals.

c. Economists use the principle of comparative advantage to emphasize the potential benefits of free

trade.

d. A country may have a comparative advantage in producing a good, even though it lacks an absolute

advantage in producing that good.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

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

questions is

a. Do specialization and trade benefit more than one party to a trade? b. Is it absolute advantage or comparative advantage that really matters? c. How are the gains from trade shared among the parties to a trade?

d. Is it possible for specialization and trade to increase total output of traded goods?

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

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

questions is

a. Is it possible for specialization and trade to benefit more than one party to a trade? b. Is it possible for specialization and trade to increase total output of traded goods?

c. Do opportunity costs play a role in people’s decisions to specialize in certain activities? d. What determines the price at which trade takes place?

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

30. Which of the following is not correct?

a. The producer who requires a smaller quantity of inputs to produce a good is said to have an

absolute advantage in producing that good.

b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost

of producing Good X.

c. The producer who has the smaller opportunity cost of producing a good is said to have a

comparative advantage in producing that good.

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

advantage.

ANS: D DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Definitional

31. Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a

worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true? a. Both countries could gain from trade with each other.

b. Neither country could gain from trade with each other because Cornland has an absolute advantage

in both goods.

c. Neither country could gain from trade with each other because neither one has a comparative

advantage.

d. Oatland could gain from trade between the two countries, but Cornland definitively would lose.

ANS: C DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage | Trade MSC: Analytical

Chapter 3 /Interdependence and the Gains from Trade ? 145

32. Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler

proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would

a. make sense if Xenophobia had an absolute advantage in all goods. b. make sense if Xenophobia had no absolute advantages in any good.

c. not make sense as long as Xenophobia had a comparative advantage in some good.

d. not make sense as long as Xenophobia had an absolute advantage in at least half the goods that

could be traded.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage | Trade MSC: Applicative

33. 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.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Interpretive

34. When each person specializes in producing the good in which he or she has a comparative advantage, total

production in the economy a. falls.

b. stays the same. c. rises.

d. may fall, rise, or stay the same.

ANS: C DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Definitional

35. 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 he or she has 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.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Interpretive

36. Which of the following statements is not correct?

a. Trade allows for specialization.

b. Trade has the potential to benefit all nations.

c. Trade allows nations to consume outside of their production possibilities curves. d. Absolute advantage is the driving force of specialization.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Interpretive

146 ? Chapter 3 /Interdependence and the Gains from Trade

37. Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars.

Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

a. the two countries’ combined output of both goods will be higher than it would be in the absence of

trade.

b. Greece will produce more fish than it would produce in the absence of trade. c. Germany will produce more cars than it would produce in the absence of trade. d. All of the above are correct.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Applicative

38. 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 5 televisions per year. Each nation has 100 workers, and each country specializes according to the principle of comparative advantage. If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year, then each country's maximum consumption of new radios and televisions per year will be

a. higher than it would be in the absence of trade because of the gains from trade. b. the same as it would be in the absence of trade.

c. less than it would be in the absence of trade because neither country is specializing in the product in

which it has a comparative advantage.

d. less than it would be in the absence of trade because Teeveeland has an absolute advantage in both

goods and so it cannot benefit by trading with Radioland.

ANS: C DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

39. 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 in 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

a. 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland. b. 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland. c. 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland. d. 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

ANS: B DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

40. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a

worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of a. 30 units of corn and 30 units of wheat. b. 40 units of corn and 30 units of wheat. c. 40 units of corn and 20 units of wheat. d. 10 units of corn and 40 units of wheat.

ANS: A DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

Chapter 3 /Interdependence and the Gains from Trade ? 147

41. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a

worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of a. 30 units of corn and 30 units of wheat. b. 40 units of corn and 30 units of wheat. c. 40 units of corn and 20 units of wheat. d. 10 units of corn and 40 units of wheat.

ANS: A DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

42. Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year,

and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year. There are 20 workers in Agland and 10 workers in Zenland. Currently the two countries do not trade. Agland produces and consumes 100 units of grain and 20 units of incense per year. Zenland produces and consumes 50 units of grain and no incense per year. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 30 units of grain and 100 units of incense. b. 30 units of grain and 150 units of incense. c. 50 units of grain and 90 units of incense. d. 50 units of grain and 130 units of incense.

ANS: D DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

43. Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a

worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 280 bushels of corn and 450 bushels of oats. b. 340 bushels of corn and 500 bushels of oats. c. 360 bushels of corn and 520 bushels of oats. d. 360 bushels of corn and 640 bushels of oats.

ANS: B DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

44. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a

worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. For many years the two countries traded, each completely specializing according to their respective comparative advantages. Now, however, war has broken out between them and all trade has stopped. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. The war has caused the combined yearly output of the two countries to decline by a. 10 units of corn and 10 units of wheat. b. 20 units of corn and 20 units of wheat. c. 30 units of corn and 30 units of wheat. d. 40 units of corn and 40 units of wheat.

ANS: B DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

Chapter 3 /Interdependence and the Gains from Trade ? 173

95. Refer to Table 3-7. Japan should specialize in the production of

a. cars and import airplanes. b. airplanes and import cars.

c. both goods and import neither good. d. neither good and import both goods.

ANS: A DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Imports MSC: Applicative

96. Refer to Table 3-7. Korea should specialize in the production of

a. cars and import airplanes. b. airplanes and import cars.

c. both goods and import neither good. d. neither good and import both goods.

ANS: B DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Imports MSC: Applicative

Table 3-8

Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate.

Kito Penda Labor Hours Needed to Make 1 Basket Birdhouse 8 2 1.5 2 Quantity Produced in 24 Hours Baskets Birdhouses 3 12 16 12 97. Refer to Table 3-8. Assume that Kito and Penda each has 24 labor hours available. If each person divides

their time equally between the production of baskets and birdhouses, then total production is a. 4.75 baskets and 2 birdhouses. b. 9.5 baskets and 12 birdhouses. c. 16 baskets and 12 birdhouses. d. 19 baskets and 24 birdhouses.

ANS: B

NAT: Analytic TOP: Production DIF: 2 REF: 3-1

LOC: Understanding and applying economic models MSC: Applicative

98. Refer to Table 3-8. Which of the following points would not be on Kito's production possibilities frontier,

based on a 24-hour production period? a. (1 basket, 8 birdhouses) b. (1.5 baskets, 6 birdhouses) c. (2 baskets, 4 birdhouses) d. (2.5 baskets, 3 birdhouses)

ANS: D DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

99. Refer to Table 3-8. Which of the following points would be on Penda's production possibilities frontier,

based on a 24-hour production period? a. (4 baskets, 10 birdhouses) b. (8 baskets, 6 birdhouses) c. (12 baskets, 2 birdhouses)

d. More than one of the above would be on Penda’s production possibilities frontier.

ANS: B DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

174 ? Chapter 3 /Interdependence and the Gains from Trade 100. Refer to Table 3-8. The opportunity cost of 1 basket for Kito is

a. 1/4 birdhouse. b. 2/3 birdhouse. c. 3/2 birdhouses. d. 4 birdhouses.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

101. Refer to Table 3-8. The opportunity cost of 1 basket for Penda is

a. 1/8 birdhouse. b. 3/4 birdhouse. c. 4/3 birdhouses. d. 8 birdhouses.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

102. Refer to Table 3-8. The opportunity cost of 1 birdhouse for Kito is

a. 1/4 basket. b. 2/3 basket. c. 3/2 baskets. d. 4 baskets.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

103. Refer to Table 3-8. The opportunity cost of 1 birdhouse for Penda is

a. 1/8 basket. b. 3/4 basket. c. 4/3 baskets. d. 8 baskets.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

104. Refer to Table 3-8. Kito has an absolute advantage in the production of

a. baskets and a comparative advantage in the production of baskets. b. baskets and a comparative advantage in the production of birdhouses. c. neither good and a comparative advantage in the production of baskets. d. neither good and a comparative advantage in the production of birdhouses.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

105. Refer to Table 3-8. Penda has an absolute advantage in the production of

a. baskets and a comparative advantage in the production of baskets. b. baskets and a comparative advantage in the production of birdhouses. c. neither good and a comparative advantage in the production of baskets. d. neither good and a comparative advantage in the production of birdhouses.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 175

106. Refer to Table 3-8. Assume that Kito and Penda each has 24 labor hours available. Originally, each

person divided their time equally between the production of baskets and birdhouses. Now, each person spends all their time producing the good in which they have a comparative advantage. As a result, the total output of baskets increased by a. 6.5. b. 8. c. 9.5. d. 16.

ANS: A DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization MSC: Analytical

107. Refer to Table 3-8. At which of the following prices would both Kito and Penda gain from trade with each

other?

a. 30 baskets for 15 birdhouses b. 30 baskets for 18 birdhouses c. 30 baskets for 24 birdhouses

d. Kito and Penda could not both gain from trade with each other at any price.

ANS: C DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Price of trade MSC: Analytical

Table 3-9

Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies.

Minutes Needed to Set Up 1 Computer 48 30 Test 1 Computer ? 40 Barb Jim Number of Computers Set Up or Tested in a 40-Hour Week Computers Computers Set Up Tested 50 40 80 60 108. Refer to Table 3-9. The number of minutes needed by Barb to test a computer is

a. 36. b. 48. c. 60. d. 64.

ANS: C

NAT: Analytic TOP: Production DIF: 2 REF: 3-1

LOC: Understanding and applying economic models MSC: Applicative

109. Refer to Table 3-9. Which of the following points would not be on Barb's production possibilities frontier,

based on a 40-hour week?

a. (0 computers set up, 40 computers tested) b. (8 computers set up, 32 computers tested) c. (25 computers set up, 20 computers tested) d. (30 computers set up, 16 computers tested)

ANS: B DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

176 ? Chapter 3 /Interdependence and the Gains from Trade

110. Refer to Table 3-9. Which of the following points would not be on Jim's production possibilities frontier,

based on a 40-hour week?

a. (0 computers set up, 60 computers tested) b. (40 computers set up, 30 computers tested) c. (60 computers set up, 12 computers tested) d. (72 computers set up, 6 computers tested)

ANS: C DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

111. Refer to Table 3-9. Barb’s opportunity cost of setting up one computer is testing

a. 4/5 computer and Jim’s opportunity cost of setting up one computer is testing 3/4 computer. b. 4/5 computer and Jim’s opportunity cost of setting up one computer is testing 4/3 computers. c. 5/4 computers and Jim’s opportunity cost of setting up one computer is testing 3/4 computer. d. 5/4 computers and Jim’s opportunity cost of setting up one computer is testing 4/3 computers.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

112. Refer to Table 3-9. Barb’s opportunity cost of testing one computer is setting up

a. 4/5 computer and Jim’s opportunity cost of testing one computer is setting up 3/4 computer. b. 4/5 computer and Jim’s opportunity cost of testing one computer is setting up 4/3 computers. c. 5/4 computers and Jim’s opportunity cost of testing one computer is setting up 3/4 computer. d. 5/4 computers and Jim’s opportunity cost of testing one computer is setting up 4/3 computers.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

113. Refer to Table 3-9. Barb has an absolute advantage in

a. both setting up and testing computers and a comparative advantage in setting up computers. b. both setting up and testing computers and a comparative advantage in testing computers. c. neither setting up nor testing computers and a comparative advantage in setting up computers. d. neither setting up nor testing computers and a comparative advantage in testing computers.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

114. Refer to Table 3-9. Jim has an absolute advantage in

a. both setting up and testing computers and a comparative advantage in setting up computers. b. both setting up and testing computers and a comparative advantage in testing computers. c. neither setting up nor testing computers and a comparative advantage in setting up computers. d. neither setting up nor testing computers and a comparative advantage in testing computers.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 177

Table 3-10

Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can

switch between programming and testing cellular phones at a constant rate. The following table applies.

Minutes Needed to Program 1 Cellular Phone ? 10 Test 1 Cellular Phone 2 4 Juanita Shantala Number of Cellular Phones Programmed or Tested in a 40-Hour Week Cellular Phones Cellular Phones Programmed Tested 160 1200 240 600 115. Refer to Table 3-10. The number of minutes needed by Juanita to program a cellular phone is

a. 4. b. 5. c. 7.5. d. 15.

ANS: D

NAT: Analytic TOP: Production DIF: 2 REF: 3-1

LOC: Understanding and applying economic models MSC: Applicative

116. Refer to Table 3-10. Which of the following points would be on Juanita's production possibilities frontier,

based on a 40-hour week?

a. (120 cellular phones programmed, 295 cellular phones tested) b. (130 cellular phones programmed, 225 cellular phones tested) c. (140 cellular phones programmed, 155 cellular phones tested)

d. Both (a) and (b) would be on Juanita’s production possibilities frontier.

ANS: B DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

117. Refer to Table 3-10. Which of the following points would be on Shantala's production possibilities frontier,

based on a 40-hour week?

a. (120 cellular phones programmed, 250 cellular phones tested) b. (180 cellular phones programmed, 150 cellular phones tested) c. (240 cellular phones programmed, 600 cellular phones tested)

d. More than one of the above would be on Shantala’s production possibilities frontier.

ANS: B DIF: 3 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Analytical

118. Refer to Table 3-10. Juanita has an absolute advantage in

a. programming cellular phones and a comparative advantage in programming cellular phones. b. programming cellular phones and a comparative advantage in testing cellular phones. c. testing cellular phones and a comparative advantage in programming cellular phones. d. testing cellular phones and a comparative advantage in testing cellular phones.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

119. Refer to Table 3-10. Shantala has an absolute advantage in

a. programming cellular phones and a comparative advantage in programming cellular phones. b. programming cellular phones and a comparative advantage in testing cellular phones. c. testing cellular phones and a comparative advantage in programming cellular phones. d. testing cellular phones and a comparative advantage in testing cellular phones.

ANS: A DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage | Comparative advantage MSC: Applicative

148 ? Chapter 3 /Interdependence and the Gains from Trade

45. Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can

produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two

countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by a. 15 blankets and 35 meals. b. 25 blankets and 40 meals. c. 35 blankets and 45 meals. d. 50 blankets and 80 meals.

ANS: A DIF: 3 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

46. Two people can benefit from specialization and trade by obtaining a good at a price that is

a. lower than his or her opportunity cost of that good. b. the same as his or her opportunity cost of that good. c. higher than his or her opportunity cost of that good. d. different than his or her opportunity cost of that good.

ANS: A DIF: 1 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Definitional

47. The gains from trade are

a. evident in economic models, but seldom observed in the real world. b. evident in the real world, but impossible to capture in economic models.

c. a result of more efficient resource allocation than would be observed in the absence of trade. d. based on the principle of absolute advantage.

ANS: C DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

48. Trade can make everybody better off because it

a. increases cooperation among nations.

b. allows people to specialize according to comparative advantage. c. requires some workers in an economy to be retrained. d. reduces competition among domestic companies.

ANS: B DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

49. If labor in Mexico is less productive than labor in the United States in all areas of production,

a. then neither nation can benefit from trade.

b. then Mexico can benefit from trade but the United States cannot.

c. then the United States will have a comparative advantage relative to Mexico in the production of all

goods.

d. then both Mexico and the United States still can benefit from trade.

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative

50. Adam Smith

a. and David Ricardo both opposed free trade.

b. opposed free trade, but David Ricardo supported it. c. supported free trade, but David Ricardo opposed it. d. and David Ricardo both supported free trade.

ANS: D

NAT: Analytic TOP: Economists DIF: 1 REF: 3-2

LOC: The study of economics and the definitions of economics MSC: Interpretive

Chapter 3 /Interdependence and the Gains from Trade ? 149

51. Adam Smith asserted that a person should never attempt to make at home

a. what it will cost him more to make than to buy.

b. any good in which that person does not have an absolute advantage. c. any luxury good. d. any necessity.

ANS: A

NAT: Analytic TOP: Economists DIF: 2 REF: 3-2

LOC: The study of economics and the definitions of economics MSC: Interpretive

52. Which famous economist developed the principle of comparative advantage as we know it today?

a. Adam Smith b. David Ricardo

c. John Maynard Keynes d. Milton Friedman

ANS: B

NAT: Analytic TOP: Economists DIF: 1 REF: 3-2

LOC: The study of economics and the definitions of economics MSC: Definitional

53. Which of the following is not correct?

a. Economists are generally united in their support of free trade.

b. The conclusions of Adam Smith and David Ricardo on the gains from trade have held up well over

time.

c. David Ricardo argued that Britain should not restrict imports of grain.

d. Economists’ opposition to trade restrictions is still based largely on the principle of absolute

advantage.

ANS: D

NAT: Analytic TOP: Economists DIF: 1 REF: 3-2

LOC: The study of economics and the definitions of economics MSC: Definitional

54. Economists generally support

a. trade restrictions.

b. government management of trade. c. export subsidies.

d. free international trade.

ANS: D

NAT: Analytic TOP: Economists

DIF: 2 REF: 3-2

LOC: The study of economics and the definitions of economics MSC: Interpretive

Sec03 - Interdependence and the Gains from Trade - Applications of Comparative Advantage

MULTIPLE CHOICE1.

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.

DIF: 1 REF: 3-3

LOC: Gains from trade, specialization and trade MSC: Definitional

ANS: D

NAT: Analytic TOP: Imports

150 ? Chapter 3 /Interdependence and the Gains from Trade 2.

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.

DIF: 1 REF: 3-3

LOC: Gains from trade, specialization and trade MSC: Definitional

ANS: D

NAT: Analytic TOP: Exports 3.

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.

DIF: 2 REF: 3-3

LOC: Gains from trade, specialization and trade MSC: Interpretive

ANS: A

NAT: Analytic TOP: Trade 4.

When a country has a comparative advantage in producing a certain good, a. the country should import that good.

b. the country should produce just enough of that good for its own consumption.

c. the country’s opportunity cost of that good is high relative to other countries’ opportunity costs of

that same good.

d. None of the above is correct.

ANS: D DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage MSC: Interpretive

5.

Which of the following would not result from all countries specializing according to the principle of

comparative advantage?

a. The size of the economic pie would increase.

b. Worldwide production of goods and services would increase. c. The well-being of citizens in each country would be enhanced.

d. Each country’s production possibilities frontier would shift outward.

ANS: D DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Interpretive

6.

A country that currently does not trade with other countries could benefit by

a. restricting imports and promoting exports. b. promoting imports and restricting exports. c. restricting both imports and exports. d. not restricting trade.

ANS: D DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive

7.

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

comparative advantage asserts that

a. the United States should produce more pork than what it requires and export some of it to Mexico. b. the United States should produce a moderate quantity of pork and import the remainder of what it

requires from Mexico.

c. the United States should refrain altogether from producing pork and import all of what it requires

from Mexico.

d. Mexico has nothing to gain from importing United States pork.

ANS: A DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage | Trade MSC: Applicative

Chapter 3 /Interdependence and the Gains from Trade ? 151

8.

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the

production of linen. If these two countries decide to trade, a. Belarus should export linen to Russia. b. Russia should export linen to Belarus.

c. trading linen would provide no net advantage to either country.

d. Without additional information about opportunity costs, this question cannot be answered.

ANS: A DIF: 2 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Comparative advantage | Trade MSC: Applicative

9.

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 from 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 in which it has a comparative advantage. If trade were to occur, the combined output of the two countries would increase by a. 25 units of wheat and 25 units of fish. b. 50 units of wheat and 50 units of fish. c. 75 units of wheat and 75 units of fish. d. 100 units of wheat and 100 units of fish.

ANS: D DIF: 3 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

10. 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 30 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 75 units of wheat and 375 units of fish per year while Farmland produces and consumes 375 units of wheat and 75 units of fish per year. If trade were to occur, Boatland would trade 90 units of fish to Farmland in exchange for 80 units of wheat. If Boatland now completely specializes in fish production, how many units of fish could it now consume along with the 80 units of imported wheat? a. 490 units b. 500 units c. 610 units d. 660 units

ANS: D DIF: 3 REF: 3-3 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Specialization | Trade MSC: Analytical

152 ? Chapter 3 /Interdependence and the Gains from Trade

Sec01-03 -Tables & Figures - Interdependence and the Gains from Trade

MULTIPLE CHOICETable 3-1

Assume that Sardi and Tinaka can switch between producing corn and producing pork at a constant rate.

Sardi Tinaka Minutes Needed to Make 1 Bushel of Corn Pound of Pork 20 12 15 10 1.

Refer to Table 3-1. Assume that Sardi and Tinaka each has 360 minutes available. If each person divides

his time equally between the production of corn and pork, then total production is a. 10.5 bushels of corn and 16.5 pounds of pork. b. 21 bushels of corn and 33 pounds of pork. c. 35 bushels of corn and 22 pounds of pork. d. 42 bushels of corn and 66 pounds of pork.

DIF: 2 REF: 3-1

LOC: Understanding and applying economic models MSC: Applicative

ANS: B

NAT: Analytic TOP: Production 2.

Refer to Table 3-1. Which of the following combinations of corn and pork could Sardi produce in one 8-hour day?

a. 6 bushels of corn and 35 pounds of pork b. 9 bushels of corn and 25 pounds of pork c. 15 bushels of corn and 20 pounds of pork d. 24 bushels of corn and 40 pounds of pork

DIF: 3 REF: 3-1

LOC: Understanding and applying economic models MSC: Analytical

ANS: B

NAT: Analytic TOP: Production 3.

Refer to Table 3-1. Which of the following combinations of corn and pork could Tinaka not produce in one 10-hour day?

a. 10 bushels of corn and 45 pounds of pork b. 20 bushels of corn and 30 pounds of pork c. 25 bushels of corn and 25 pounds of pork d. 30 bushels of corn and 15 pounds of pork

DIF: 3 REF: 3-1

LOC: Understanding and applying economic models MSC: Analytical

ANS: C

NAT: Analytic TOP: Production 4.

Refer to Table 3-1. What is Sardi’s opportunity cost of producing one bushel of corn? a. 3/5 pound of pork b. 6/5 pounds of pork c. 4/3 pounds of pork d. 5/3 pounds of pork

ANS: D DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Applicative

本文来源：https://www.bwwdw.com/article/l7ov.html