Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Table 3-2
 
-Refer to Table 3-2. The opportunity cost of one kg of butter for Lee is:

Accepted Answer

A)   3/2 kg of rice
B)   4/3 kg of rice
C)   3/4 kg of rice
D)   2/3 kg of riceE) B) and C)
F) A) and D)

Question 3

The table below describes the production possibilities for Lee and Amy in a four-hour shift.
NARRBEGIN: Table 3-5
Table 3-5
  NARREND
a. What is the opportunity cost of one coffee for each person? What is the opportunity cost of one croissant?
b. Who has a comparative advantage in coffees? Who has a comparative advantage in croissants?
c. Who has an absolute advantage in coffees? Who has an absolute advantage in croissants?
d. Who should produce coffees? Who should produce croissants?

Accepted Answer

a. The opportunity cost of one coffee fo...

Question 4

Graph 3-2
  
These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
-According to Graph 3-2:

Accepted Answer

A)   Amy should specialise in doughnuts, and Jim should specialise in coffee
B)   Amy should specialise in coffee, and Jim should specialise in doughnuts
C)   Amy should specialise in coffee, and Jim should specialise in neither goods
D)   Amy should specialise in both goods, and Jim should specialise in coffeeE) C) and D)
F) None of the above

Question 5

Trade allows a country to consume outside its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 6

Graph 3-1
  
These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-Refer to Graph 3-1. For Friday, the opportunity cost of 1 kg of coconuts is:

Accepted Answer

A)   2/3 kg of fish
B)   3 kg of fish
C)   1 kg of fish
D)   2 kg of fishE) A) and B)
F) A) and C)

Question 7

David Ricardo was the author of:

Accepted Answer

A)   An Inquiry into the Nature and Causes of the Wealth of Nations
B)   Principles of Political Economy and Taxation
C)   The General Theory of Prices and Employment
D)   Why Nations TradeE) A) and B)
F) A) and D)

Question 8

Use the accompanying table to answer the following questions.
Table 3-4
 
-Refer to Table 3-4. If England and Spain specialise and trade according to their respective comparative advantages:

Accepted Answer

A)   all individuals in both countries will benefit
B)   Spain will specialise in and export bread
C)   England will produce more bread than in the absence of trade
D)   England will produce more cheese than in the absence of tradeE) A) and C)
F) B) and D)

Question 9

If it takes Australian workers fewer hours to produce every good than it takes Malaysian workers, Australia cannot gain from trade with Malaysia.

Accepted Answer

A) True 
 B)False

Question 10

Trade can benefit society as a whole because it allows:

Accepted Answer

A)   people to specialise in activities in which they have a comparative advantage
B)   for a more efficient use of resources
C)   for goods to be obtained at a lower opportunity cost
D)   all of the above are correctE) B) and C)
F) A) and D)

Question 11

Table 3-2
 
-According to Table 3-2:

Accepted Answer

A)   Lee has a comparative advantage in rice, and John has an absolute advantage in butter
B)   Lee has a comparative advantage in butter, and John has an absolute advantage in rice
C)   Lee has a comparative advantage in rice, and John has an absolute advantage in neither goods
D)   Lee has a comparative advantage in butter, and John has an absolute advantage in neither goodsE) None of the above
F) All of the above

Question 12

Graph 3-1
  
These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-According to Graph 3-1:

Accepted Answer

A)   Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in coconuts
B)   Robinson Crusoe has a comparative advantage in coconuts, and Friday has a comparative advantage in fish
C)   Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in fish
D)   Robinson Crusoe has a comparative advantage in fish, and Friday has a comparative advantage in neither goodsE) A) and D)
F) B) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Julia can produce 15 apple pies or one dozen croissants in one day. Jacque can produce two apple pies or 10 dozen croissants in one day.
a. Draw the production possibilities frontiers for Julia and Jacque.
b. What pattern of specialisation and trade will benefit both Julia and Jacque?

Accepted Answer

a. The production possibilities frontier...

Question 15

Use the accompanying table to answer the following questions.
Table 3-4
 
-According to Table 3-4, if England and Spain trade according to the principle of comparative advantage, they will import _____ respectively.

Accepted Answer

A)   bread and cheese
B)   bread and bread
C)   cheese and cheese
D)   cheese and breadE) A) and B)
F) A) and C)

Question 16

Table 3-2
 
-According to Table 3-2:

Accepted Answer

A)   Lee and John both could benefit by Lee specialising in butter, and John specialising in rice
B)   Lee and John both could benefit by Lee specialising in butter, and John specialising in butter
C)   Lee and John both could benefit by Lee specialising in rice, and John specialising in butter
D)   Lee and John both could benefit by Lee specialising in rice, and John specialising in riceE) None of the above
F) A) and D)

Question 17

People's motivation to trade comes from the goods or services they expect to get in return.

Accepted Answer

A) True 
 B)False

Question 18

A person is able to obtain goods at prices that are less than that person's opportunity cost because each person concentrates on the activity for which he or she has the lower opportunity cost.

Accepted Answer

A) True 
 B)False

Question 19

Graph 3-2
  
These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
-According to Graph 3-2:

Accepted Answer

A)   Amy has a comparative advantage in doughnuts, and Jim has an absolute advantage in coffee
B)   Amy has a comparative advantage in doughnuts, and Jim has an absolute advantage in neither goods
C)   Amy has a comparative advantage in coffee, and Jim has an absolute advantage in doughnuts
D)   Amy has a comparative advantage in coffee, and Jim has an absolute advantage in neither goodsE) A) and B)
F) None of the above

Question 20

Trade is not based on absolute advantage; rather it is based on comparative advantage.

Accepted Answer

A) True 
 B)False

Exam 3: Interdependence and the Gains From Trade

Use the accompanying table to answer the following questions. Table 3-4 -Refer to Table 3-4. If England and Spain specialise and trade according to their respective comparative advantages:

Correct Answer
verified

Use the accompanying table to answer the following questions. Table 3-4 -According to Table 3-4, if England and Spain trade according to the principle of comparative advantage, they will import _____ respectively.

Correct Answer
verified

Trade is not based on absolute advantage; rather it is based on comparative advantage.

Correct Answer
verified

People's motivation to trade comes from the goods or services they expect to get in return.

Correct Answer
verified

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

Correct Answer
verified

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -Refer to Graph 3-1. For Friday, the opportunity cost of 1 kg of coconuts is:

Correct Answer
verified

Table 3-2 -According to Table 3-2:

Correct Answer
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If it takes Australian workers fewer hours to produce every good than it takes Malaysian workers, Australia cannot gain from trade with Malaysia.

Correct Answer
verified

Table 3-2 -According to Table 3-2:

Correct Answer
verified

Trade can benefit society as a whole because it allows:

Correct Answer
verified

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -According to Graph 3-1:

Correct Answer
verified

Table 3-2 -Refer to Table 3-2. The opportunity cost of one kg of butter for Lee is:

Correct Answer
verified

Correct Answer
verified
a. The opportunity cost of one coffee fo...
View Answer

Julia can produce 15 apple pies or one dozen croissants in one day. Jacque can produce two apple pies or 10 dozen croissants in one day. a. Draw the production possibilities frontiers for Julia and Jacque. b. What pattern of specialisation and trade will benefit both Julia and Jacque?

Correct Answer
verified
a. The production possibilities frontier...
View Answer

Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour. -According to Graph 3-2:

Correct Answer
verified

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

Correct Answer
verified

A person is able to obtain goods at prices that are less than that person's opportunity cost because each person concentrates on the activity for which he or she has the lower opportunity cost.

Correct Answer
verified

Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour. -According to Graph 3-2:

Correct Answer
verified

Trade allows a country to consume outside its production possibilities frontier.

Correct Answer
verified

David Ricardo was the author of:

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

Use the accompanying table to answer the following questions. Table 3-4 -Refer to Table 3-4. If England and Spain specialise and trade according to their respective comparative advantages:

Correct AnswerverifiedShow Answer

Use the accompanying table to answer the following questions. Table 3-4 -According to Table 3-4, if England and Spain trade according to the principle of comparative advantage, they will import _____ respectively.

Correct AnswerverifiedShow Answer

Trade is not based on absolute advantage; rather it is based on comparative advantage.

Correct AnswerverifiedShow Answer

People's motivation to trade comes from the goods or services they expect to get in return.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -Refer to Graph 3-1. For Friday, the opportunity cost of 1 kg of coconuts is:

Correct AnswerverifiedShow Answer

Table 3-2 -According to Table 3-2:

Correct AnswerverifiedShow Answer

If it takes Australian workers fewer hours to produce every good than it takes Malaysian workers, Australia cannot gain from trade with Malaysia.

Correct AnswerverifiedShow Answer

Table 3-2 -According to Table 3-2:

Correct AnswerverifiedShow Answer

Trade can benefit society as a whole because it allows:

Correct AnswerverifiedShow Answer

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -According to Graph 3-1:

Correct AnswerverifiedShow Answer

Table 3-2 -Refer to Table 3-2. The opportunity cost of one kg of butter for Lee is:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The opportunity cost of one coffee fo...View AnswerShow Answer

Julia can produce 15 apple pies or one dozen croissants in one day. Jacque can produce two apple pies or 10 dozen croissants in one day. a. Draw the production possibilities frontiers for Julia and Jacque. b. What pattern of specialisation and trade will benefit both Julia and Jacque?

Correct Answerverifieda. The production possibilities frontier...View AnswerShow Answer

Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour. -According to Graph 3-2:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A person is able to obtain goods at prices that are less than that person's opportunity cost because each person concentrates on the activity for which he or she has the lower opportunity cost.

Correct AnswerverifiedShow Answer

Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour. -According to Graph 3-2:

Correct AnswerverifiedShow Answer

Trade allows a country to consume outside its production possibilities frontier.

Correct AnswerverifiedShow Answer

David Ricardo was the author of:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. The opportunity cost of one coffee fo...
View Answer

Correct Answer
verified
a. The production possibilities frontier...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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