Question 1

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?

Accepted Answer

a.
If both tasks are divided equally, it...

Question 2

Figure 3-4
  
-Refer to Figure 3-4. If point A represents Alvina's production and point B represents Betty's production,

Accepted Answer

A)  Alvina produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas.
B)  Alvina produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas.
C)  Alvina produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas.
D)  Only Alvina can benefit from specialization and trade.E) A) and C)
F) A) and B)

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?

Accepted Answer

Yes. More than 2.5 c...

Question 5

Figure 3-6
The production possibilities frontiers below show how much Greg and Catherine can each produce in 8 hours of time.
Greg's Production Possibilities
Catherine's Production Possibilities   ​
-Refer to Figure 3-6. What is Greg's opportunity cost of producing cake? Explain how you derived your answer.

Accepted Answer

It takes Greg 2 hours to produ...

Question 6

Table 3-11
Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate.
​
​
 
-Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Accepted Answer

A)  1 radio for 1 cooler
B)  1 radio for 4 coolers
C)  1 radio for 10 coolers
D)  1 radio for 15 coolersE) None of the above
F) A) and B)

Question 7

​Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Accepted Answer

A) True 
 B)False

Question 8

Table 3-2
​
​
  ​
​
-Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Accepted Answer

A)  2 units of pastrami and 20 units of milk
B)  4.5 units of pastrami and 20 units of milk
C)  20 units of pastrami and 20 units of milk
D)  4 units of pastrami and 10 units of milkE) B) and D)
F) B) and C)

Question 9

Figure 3-7
Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier   ​
-Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Accepted Answer

The answer of Figure 3-7
Mary's Production Possibilities Frontier Kate's Production...

Question 10

The gains from trade are

Accepted Answer

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.E) A) and C)
F) A) and D)

Question 11

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Accepted Answer

A)  neither person faces trade-off.
B)  the frontiers are straight lines.
C)  the frontiers are bowed out.
D)  they choose not to trade with one another.E) None of the above
F) All of the above

Question 12

The gains from specialization and trade are based on ______ advantage.

Accepted Answer

The answer of The gains from specialization and trade are...

Exam 3: Interdependence and the Gains From Trade

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?

Correct Answer
verified
Yes. More than 2.5 c...
View Answer

Correct Answer
verified
a.
If both tasks are divided equally, it...
View Answer

Table 3-2 -Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Correct Answer
verified

Figure 3-7 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Correct Answer
verified

The gains from specialization and trade are based on ______ advantage.

Correct Answer
verified

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.

Correct Answer
verified

The gains from trade are

Correct Answer
verified

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Correct Answer
verified

Correct Answer
verified
It takes Greg 2 hours to produ...
View Answer

Table 3-11 Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Correct Answer
verified

Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Correct Answer
verified

Figure 3-4 -Refer to Figure 3-4. If point A represents Alvina's production and point B represents Betty's production,

Correct Answer
verified

Exam 3: Interdependence and the Gains From Trade

Sally can make 8 cups of soup per hour or 20 crackers per hour. Harry can make 10 cups of soup per hour or 30 crackers per hour. Can Sally and Harry gain from trade? If so, what is the range of prices of crackers for soup at which they would both find trade advantageous?

Correct AnswerverifiedYes. More than 2.5 c...View AnswerShow Answer

Correct Answerverifieda.If both tasks are divided equally, it...View AnswerShow Answer

Table 3-2 ​ ​ ​ ​ -Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Correct AnswerverifiedShow Answer

Figure 3-7 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier ​ -Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Correct AnswerverifiedShow Answer

The gains from specialization and trade are based on ______ advantage.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The gains from trade are

Correct AnswerverifiedShow Answer

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt takes Greg 2 hours to produ...View AnswerShow Answer

Table 3-11 Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate. ​ ​ -Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Correct AnswerverifiedShow Answer

​Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Correct AnswerverifiedShow Answer

Figure 3-4 -Refer to Figure 3-4. If point A represents Alvina's production and point B represents Betty's production,

Correct AnswerverifiedShow Answer

Correct Answer
verified
Yes. More than 2.5 c...
View Answer

Correct Answer
verified
a.
If both tasks are divided equally, it...
View Answer

Table 3-2 -Refer to Table 3-2. Which of the following combinations of pastrami and milk could France produce in 20 hours?

Correct Answer
verified

Figure 3-7 Mary's Production Possibilities Frontier Kate's Production Possibilities Frontier -Refer to Figure 3-7. Who has a comparative advantage in making muffins?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It takes Greg 2 hours to produ...
View Answer

Table 3-11 Assume that Bahamas and Denmark can switch between producing coolers and producing radios at a constant rate. -Refer to Table 3-11. At which of the following prices would both Bahamas and Denmark gain from trade with each other?

Correct Answer
verified

Trade does not benefit a nation if that nation has a comparative advantage in the production of that good.

Correct Answer
verified

Correct Answer
verified