Principles of Microeconomics 8th Edition by N. Gregory Mankiw - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. People who provide you with goods and services a. are acting out of generosity. b. do so because they get something in return. …
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Principles of Microeconomics 8th Edition by N. Gregory Mankiw – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
1. People who provide you with goods and services
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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
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1. Which of the following is not a reason people choose to depend on others for goods and services?
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2. When can two countries gain from trading two goods?
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3. Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could
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4. Olivia bakes cakes and Andrew grows corn. Olivia and Andrew both like to eat cake and eat corn. In which of the following cases is it impossible for both Olivia and Andrew to benefit from trade?
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5. Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?
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6. The production possibilities frontier illustrates
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7. An economy’s production possibilities frontier is also its consumption possibilities frontier
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8. A production possibilities frontier is bowed outward when
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9. A production possibilities frontier is a straight line when
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10. Consider two individuals — Marquis and Serena — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?
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11. Consider two individuals — Howard and Mai — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Howard and Mai are least obvious in which of the following cases?
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12. A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his
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13. Suppose there are only two people in the world. Each person’s production possibilities frontier also represents his or her consumption possibilities when
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14. The most obvious benefit of specialization and trade is that they allow us to
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15. As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne’s production possibilities frontier is a straight line if
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16. For a self-sufficient producer, the production possibilities frontier
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Table 3-1
Assume that John and Jane can switch between producing bread and wine at a constant rate.
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17. Refer to Table 3-1. Assume that John and Jane each work 24 hours. What happens to total production if instead of each person spending 12 hours producing each good, Jane spends 21 hours producing wine and 3 hours producing bread and John spends 3 hours producing wine and 21 hours producing bread?
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Table 3-2
Assume that England and Holland can switch between producing milk and oats at a constant rate.
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18. Refer to Table 3-2. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Holland. If we were to do this, measuring milk along the horizontal axis, then
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| Table 3-3 Production Opportunities
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19. Refer to Table 3-3. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is
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20. Refer to Table 3-3. Which of the following combinations of cheese and wine could France produce in 40 hours?
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21. Refer to Table 3-3. Which of the following combinations of cheese and wine could England not produce in 40 hours?
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22. Refer to Table 3-3. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring cheese along the horizontal axis, then
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23. Refer to Table 3-3. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for France. If we were to do this, measuring wine along the horizontal axis, then
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Table 3-4
Assume that Andrea and Paul can switch between producing wheat and producing beef at a constant rate.
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24. Refer to Table 3-4. Assume that Andrea and Paul each has 480 minutes available. If each person divides his time equally between the production of wheat and beef, then total production is
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25. Refer to Table 3-4. Which of the following combinations of wheat and beef could Andrea produce in one 8-hour day?
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26. Refer to Table 3-4. Which of the following combinations of wheat and beef could Paul not produce in one 8-hour day?
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| Table 3-5 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
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27. Refer to Table 3-5. Which of the following represents Aruba’s production possibilities frontier when 100 labor hours are available?
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28. Refer to Table 3-5. Which of the following represents Iceland’s production possibilities frontier when 100 labor hours are available?
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29. Refer to Table 3-5. Assume that Aruba and Iceland each has 80 labor hours available. If each country divides its time equally between the production of coolers and radios, then total production is
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30. Refer to Table 3-5. Which of the following combinations of coolers and radios could Aruba produce in one 40-hour week?
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Table 3-6
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
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31. Refer to Table 3-6. Which of the following represents Zimbabwe’s and Portugal’s production possibilities frontiers when each country has 60 minutes of machine time available?
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32. Refer to Table 3-6. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is
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33. Refer to Table 3-6. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes?
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34. Refer to Table 3-6. Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?
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| Table 3-7
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
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35. Refer to Table 3-7. Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is
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36. Refer to Table 3-7. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours?
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37. Refer to Table 3-7. Which of the following combinations of meat and potatoes could the rancher not produce in 24 hours?
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| Table 3-8
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
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38. Refer to Table 3-8. Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is
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39. Refer to Table 3-8. Which of the following combinations of cheese and bread could Spain produce in 24 hours?
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40. Refer to Table 3-8. Which of the following combinations of cheese and bread could England not produce in 24 hours?
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41. Refer to Table 3-8. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring cheese along the horizontal axis, then
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42. Refer to Table 3-8. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring bread along the horizontal axis, then
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| Table 3-9
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
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43. Refer to Table 3-9. Assume that Maya and Miguel each has 60 hours available. If each person divides his/her time equally between the production of mixers and toasters, then total production is
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44. Refer to Table 3-9. Which of the following combinations of mixers and toasters could Maya produce in 60 hours?
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45. Refer to Table 3-9. Which of the following combinations of mixers and toasters could Miguel not produce in 80 hours?
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46. Refer to Table 3-9. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring mixers along the horizontal axis, then
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47. Refer to Table 3-9. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring toasters along the horizontal axis, then
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| Table 3-10
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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48. Refer to Table 3-10. Assume that Japan and Korea each has 2400 hours available. If each country divides its time equally between the production of cars and airplanes, then total production is
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49. Refer to Table 3-10. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring cars along the horizontal axis, then
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50. Refer to Table 3-10. We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring airplanes along the horizontal axis, then
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| Table 3-11
Assume that Max and Min can switch between producing mittens and producing hats at a constant rate.
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51. Refer to Table 3-11. Assume that Max and Min each has 36 labor hours available. If each person divides his/her time equally between the production of mittens and hats, then total production is
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52. Refer to Table 3-11. Which of the following points would not be on Max’s production possibilities frontier, based on a 36-hour production period?
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53. Refer to Table 3-11. Which of the following points would be on Min’s production possibilities frontier, based on a 36-hour production period?
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| Table 3-12 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.
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54. Refer to Table 3-12. The number of minutes needed by Barb to test a computer is
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55. Refer to Table 3-12. Which of the following points would not be on Barb’s production possibilities frontier, based on a 40-hour week?
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56. Refer to Table 3-12. Which of the following points would not be on Jim’s production possibilities frontier, based on a 40-hour week?
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| Table 3-13
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.
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57. Refer to Table 3-13. The number of minutes needed by Juanita to program a cellular phone is
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58. Refer to Table 3-13. Which of the following points would be on Juanita’s production possibilities frontier, based on a 40-hour week?
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59. Refer to Table 3-13. Which of the following points would be on Shantala’s production possibilities frontier, based on a 40-hour week?
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| Table 3-14 Assume that Nick and Faldo can switch between producing wheat and producing cloth at a constant rate.
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60. Refer to Table 3-14. Assume that Nick and Faldo each has 2 hours available. If each person divides his time equally between the production of wheat and cloth, then total production is
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| Table 3-15
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61. Refer to Table 3-15. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is
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62. Refer to Table 3-15. Which of the following combinations of meat and potatoes could the farmer produce in 40 hours?
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63. Refer to Table 3-15. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours?
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| Table 3-16 The following table contains some production possibilities for an economy for a given month.
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64. Refer to Table 3-16. If the production possibilities frontier is bowed outward, then “?” could be
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65. Refer to Table 3-16. If the production possibilities frontier is a straight line, then “?” must be
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| Table 3-17 The following table contains some production possibilities for an economy for a given year.
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66. Refer to Table 3-17. If the production possibilities frontier is bowed outward, then “?” could be
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67. Refer to Table 3-17. If the production possibilities frontier is a straight line, then “?” must be
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| Table 3-18 The following table contains some production possibilities for an economy for a given month.
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68. Refer to Table 3-18. If the production possibilities frontier is bowed outward, then “?” could be
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69. Refer to Table 3-18. If the production possibilities frontier is a straight line, then “?” must be
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| Table 3-19 Summary of the Gains from Trade
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70. Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty’s gains from specialization and trade?
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Figure 3-1
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71. Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches is constant in
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72. Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches depends on how many chairs and couches are being produced in
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| Figure 3-2
Brazil’s Production Possibilities Frontier |
73. Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that
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74. Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one peanut?
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75. Refer to Figure 3-2. If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one cashew?
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76. Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil produce in two months?
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77. Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months?
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Figure 3-3
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78. Refer to Figure 3-3. If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?
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79. Refer to Figure 3-3. If the production possibilities frontier shown for Arturo is for 100 hours of production, then how long does it take Arturo to make one burrito?
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80. Refer to Figure 3-3. If Arturo and Dina both spend all of their time producing tacos, then total production is
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81. Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is
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82. Refer to Figure 3-3. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together produce in a given day?
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83. Refer to Figure 3-3. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together not produce in a given day?
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Figure 3-4
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84. Refer to Figure 3-4. If Bryce must work 4 months to produce each sweater, then his production possibilities frontier is based on how many months of work?
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85. Refer to Figure 3-4. If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket?
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86. Refer to Figure 3-4. If Lisa and Bryce both spend all of their time producing jackets, then total production is
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87. Refer to Figure 3-4. If Lisa and Bryce each divides his or her time equally between producing jackets and producing sweaters, then total production is
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88. Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of working, then which of the following combinations of jackets and sweaters could Lisa and Bryce together produce in a given year?
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89. Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of production, then which of the following combinations of sweaters and jackets could Lisa and Bryce together not produce in a given year?
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Figure 3-5
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90. Refer to Figure 3-5. If Hosne must work 0.5 hour to make each purse, then her production possibilities frontier is based on how many hours of work?
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91. Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse?
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92. Refer to Figure 3-5. If Hosne and Merve both spend all of their time making wallets, then total production is
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93. Refer to Figure 3-5. If Hosne and Merve each divides her time equally between making purses and making wallets, then total production is
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Figure 3-6
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94. Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her production possibilities frontier is based on how many hours of work?
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95. Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie?
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96. Refer to Figure 3-6. If Maxine and Daisy each divides her time equally between making pies and making tarts, then total production is
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97. Refer to Figure 3-6. If the production possibilities frontiers shown are each for one day of work, then which of the following combinations of pies and tarts could Maxine and Daisy together not make in a given day?
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Figure 3-7
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98. Refer to Figure 3-7. If Bintu must work 2 hours to make each cup, then her production possibilities frontier is based on how many hours of work?
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99. Refer to Figure 3-7. If the production possibilities frontier shown for Juba is for 2 hours of work, then how long does it take Juba to make one bowl?
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100. Refer to Figure 3-7. If Bintu and Juba both spend all of their time making bowls, then total production is
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101. Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls and making cups, then total production is
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102. Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together make in a given 4-hour production period?
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103. Refer to Figure 3-7. If the production possibilities frontiers shown are each for 4 hours of work, then which of the following combinations of bowls and cups could Bintu and Juba together not make in a given 4-hour production period?
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Figure 3-8
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104. Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is
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105. Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of coffee and soybeans could Chile and Colombia together make in a given day?
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106. Refer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of pounds of coffee and pounds of soybeans could Chile and Colombia together not make in a given day?
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Figure 3-9
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107. Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is
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108. Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together make in a given 2-day production period?
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109. Refer to Figure 3-9. If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together not make in a given 2-day production period?
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| Figure 3-10 Alice and Betty’s Production Possibilities in one 8-hour day.
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110. Refer to Figure 3-10. Both Alice and Betty
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111. Refer to Figure 3-10. If Alice produces only lemonade, she can produce
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112. Refer to Figure 3-10. If point A represents Alice’s production and point B represents Betty’s production,
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113. Refer to Figure 3-10. If point A represents Alice’s current production and point B represents Betty’s current production, under what circumstances can both Alice and Betty benefit from specialization and trade?
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| Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. |
114. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then how long does it take Bonovia to make one pound of cheese?
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115. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours?
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116. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours?
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Figure 3-12
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117. Refer to Figure 3-12. If Argentina and Peru each divides its time equally between producing corn and fish, then total production is
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118. A production possibilities frontier (PPF) is characterized by increasing opportunity costs when
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1. By definition, imports are
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2. By definition, exports are
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3. Goods produced abroad and sold domestically are called
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4. Trade between countries
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5. When a country has a comparative advantage in producing a certain good,
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6. Which of the following would not result from all countries specializing according to the principle of comparative advantage?
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7. A country that currently does not trade with other countries could benefit by
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8. Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
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9. 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,
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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 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
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11. 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?
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12. In which of the following cases should the United States produce more noodles than it wants for its own use and trade some of those noodles to Italy in exchange for wine?
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13. Suppose the U.S. and Japan can both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. Also suppose the U.S. has an absolute advantage in the production of both airplanes and televisions. The U.S. should
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14. Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,
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15. Serena Williams should pay someone else to mow her lawn instead of mowing it herself, unless
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16. Serena Williams should probably not mow her own lawn because
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17. When two countries trade with one another, it is most likely because
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| Table 3-37 Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
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18. Refer to Table 3-37. Aruba should export
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19. Refer to Table 3-37. Iceland should export
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| Table 3-38
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
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20. Refer to Table 3-38. England should export
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21. Refer to Table 3-38. Spain should export
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| Table 3-39
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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22. Refer to Table 3-39. Japan should specialize in the production of
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23. Refer to Table 3-39. Korea should specialize in the production of
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Figure 3-25
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24. Refer to Figure 3-25. Chile should specialize in the production of
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25. Refer to Figure 3-25. Colombia should specialize in the production of
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26. Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?
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| Table 3-40
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27. Refer to Table 3-40. Germany should specialize in the production of
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28. Refer to Table 3-40. Italy should specialize in the production of
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1. Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States’ production possibilities frontier?
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2. Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of these pairs of points could be on Brazil’s production possibilities frontier?
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3. What must be given up to obtain an item is called
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4. The opportunity cost of an item is
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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
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6. If Korea is capable of producing either shoes or soccer balls or some combination of the two, then
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7. Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is
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8. Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is
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9. Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is
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10. Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is
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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
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12. Absolute advantage is found by comparing different producers’
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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,
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14. If Shawn can produce more donuts in one day than Sue can produce in one day, then
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15. Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs.. Given this, we know that
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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.
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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.
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18. Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?
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19. Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible?
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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
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21. If Shawn can produce donuts at a lower opportunity cost than Sue, then
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22. If Iowa’s opportunity cost of corn is lower than Oklahoma’s opportunity cost of corn, then
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23. Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if
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24. Both Dave and Caroline produce sweaters and socks. If Dave’s opportunity cost of 1 sweater is 3 socks and Caroline’s opportunity cost of 1 sweater is 5 socks, then
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25. Comparative advantage is related most closely to which of the following?
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26. When describing the opportunity cost of two producers, economists use the term
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27. For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to
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28. 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?
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29. Which of the following statements about comparative advantage is not true?
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30. The principle of comparative advantage does not provide answers to certain questions. One of those questions is
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31. The principle of comparative advantage does not provide answers to certain questions. One of those questions is
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32. Which of the following is not correct?
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33. 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?
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34. 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
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35. Specialization and trade are closely linked to
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36. When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy
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37. Total output in an economy increases when each person specializes because
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38. Which of the following statements is not correct?
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39. 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
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40. 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
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41. 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
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42. 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
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43. 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
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44. 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
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45. 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
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46. 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
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47. 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
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48. A person can benefit from specialization and trade by obtaining a good at a price that is
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49. The gains from trade are
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50. Trade can make everybody better off because it
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51. If labor in Mexico is less productive than labor in the United States in all areas of production,
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Table 3-20
Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.
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52. Refer to Table 3-20. What is Brad’s opportunity cost of producing one pound of beef?
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53. Refer to Table 3-20. What is Brad’s opportunity cost of producing one bushel of wheat?
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54. Refer to Table 3-20. What is Theresa’s opportunity cost of producing one bushel of wheat?
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55. Refer to Table 3-20. What is Theresa’s opportunity cost of producing one pound of beef?
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56. Refer to Table 3-20. Brad has an absolute advantage in the production of
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57. Refer to Table 3-20. Brad has a comparative advantage in the production of
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58. Refer to Table 3-20. Brad should specialize in the production of
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59. Refer to Table 3-20. Assume that Brad and Theresa each has 60 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is
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60. Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other?
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| Table 3-21 Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. The following table shows the number of coolers or number of radios each country can produce in one day.
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61. Refer to Table 3-21. Jamaica’s opportunity cost of one cooler is
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62. Refer to Table 3-21. Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision?
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63. Refer to Table 3-21. Jamaica has an absolute advantage in the production of
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64. Refer to Table 3-21. Jamaica has a comparative advantage in the production of
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65. Refer to Table 3-21. Jamaica should specialize in the production of
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66. Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of coolers increased by
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67. Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by
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68. Refer to Table 3-21. At which of the following prices would both Jamaica and Norway gain from trade with each other?
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69. Refer to Table 3-21. Jamaica and Norway would not be able to gain from trade if Norway’s opportunity cost of one radio changed to
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Table 3-22
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
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70. Refer to Table 3-22. Zimbabwe’s opportunity cost of one hairbrush is
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71. Refer to Table 3-22. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision?
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72. Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of
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73. Refer to Table 3-22. Portugal has an absolute advantage in the production of
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74. Refer to Table 3-22. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by
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75. Refer to Table 3-22. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe’s opportunity cost of one toothbrush changed to
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| Table 3-23
Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate.
|
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76. Refer to Table 3-23. The opportunity cost of 1 pound of pork for the farmer is
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77. Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is
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78. Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the farmer is
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79. Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the rancher is
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80. Refer to Table 3-23. The farmer has an absolute advantage in the production of
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81. Refer to Table 3-23. The rancher has an absolute advantage in the production of
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82. Refer to Table 3-23. The farmer has a comparative advantage in the production of
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83. Refer to Table 3-23. The rancher has a comparative advantage in the production of
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84. Refer to Table 3-23. The farmer should specialize in the production of
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85. Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is
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86. Refer to Table 3-23. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of pork for 2 pounds of tomatoes, then
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87. Refer to Table 3-23. Without trade, the farmer produced and consumed 2 pounds of pork and 4 pounds of tomatoes and the rancher produced and consumed 4 pounds of pork and 2 pounds of tomatoes. Then, each person agreed to specialize in the production of the good in which he has a comparative advantage and trade 4 pounds of pork for 6 pounds of tomatoes. As a result,
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| Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
|
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88. Refer to Table 3-24. The opportunity cost of 1 unit of cheese for England is
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89. Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is
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90. Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is
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91. Refer to Table 3-24. The opportunity cost of 1 unit of bread for Spain is
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92. Refer to Table 3-24. England has an absolute advantage in the production of
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93. Refer to Table 3-24. England has a comparative advantage in the production of
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94. Refer to Table 3-24. England should specialize in the production of
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95. Refer to Table 3-24. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by
|
96. Refer to Table 3-24. At which of the following prices would both England and Spain gain from trade with each other?
|
97. Refer to Table 3-24. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume
|
98. Refer to Table 3-24. Without trade, England produced and consumed 32 units of cheese and 2 units of bread and Spain produced and consumed 6 units of cheese and 2 units of bread. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 7 units of cheese for 2.5 units of bread. As a result, England gained
|
| Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
|
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99. Refer to Table 3-25. The opportunity cost of 1 mixer for Maya is
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100. Refer to Table 3-25. The opportunity cost of 1 mixer for Miguel is
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101. Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is
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102. Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is
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103. Refer to Table 3-25. Maya has an absolute advantage in the production of
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104. Refer to Table 3-25. Miguel has an absolute advantage in the production of
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105. Refer to Table 3-25. Maya should specialize in the production of
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106. Refer to Table 3-25. At which of the following prices would both Maya and Miguel gain from trade with each other?
|
| Table 3-26
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
|
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107. Refer to Table 3-26. Japan’s opportunity cost of one airplane is
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108. Refer to Table 3-26. Japan’s opportunity cost of one car is
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109. Refer to Table 3-26. Suppose Japan decides to increase its production of cars by 45. What is the opportunity cost of this decision?
|
110. Refer to Table 3-26. Suppose Korea decides to increase its production of cars by 18. What is the opportunity cost of this decision?
|
111. Refer to Table 3-26. Japan has an absolute advantage in the production of
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112. Refer to Table 3-26. Korea has an absolute advantage in the production of
|
113. Refer to Table 3-26. Assume that Japan and Korea each has 2400 hours available. Originally, each country divided its time equally between the production of cars and airplanes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cars increased by
|
114. Refer to Table 3-26. Japan and Korea would not be able to gain from trade if Korea’s opportunity cost of one car changed to
|
115. Refer to Table 3-26. Assume that Japan and Korea each has 2400 hours available. If each country spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 cars for 6 airplanes, then
|
116. Refer to Table 3-26. Without trade, Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes. As a result, Japan gained
|
| Table 3-27
Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate.
|
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117. Refer to Table 3-27. The opportunity cost of 1 parasol for Huang is
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118. Refer to Table 3-27. The opportunity cost of 1 parasol for Min is
|
119. Refer to Table 3-27. The opportunity cost of 1 plate for Huang is
|
120. Refer to Table 3-27. The opportunity cost of 1 plate for Min is
|
121. Refer to Table 3-27. Huang has an absolute advantage in the production of
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122. Refer to Table 3-27. Min has an absolute advantage in the production of
|
123. Refer to Table 3-27. Assume that Huang and Min each has 36 labor hours available. Originally, each person divided his/her time equally between the production of parasols and plates. Now, each person spends all their time producing the good in which they have a comparative advantage. As a result, the total output of plates increased by
|
124. Refer to Table 3-27. At which of the following prices would both Huang and Min gain from trade with each other?
|
| Table 3-28 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.
|
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125. Refer to Table 3-28. Barb’s opportunity cost of setting up one computer is testing
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126. Refer to Table 3-28. Barb’s opportunity cost of testing one computer is setting up
|
127. Refer to Table 3-28. Barb has an absolute advantage in
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128. Refer to Table 3-28. Jim has an absolute advantage in
|
| Table 3-29
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.
|
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129. Refer to Table 3-29. Juanita has an absolute advantage in
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130. Refer to Table 3-29. Juanita’s opportunity cost of programming one cellular phone is testing
|
131. Refer to Table 3-29. Juanita’s opportunity cost of testing one cellular phone is programming
|
132. Refer to Table 3-29. Shantala has an absolute advantage in
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| Table 3-30
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
|
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133. Refer to Table 3-30. Falda has an absolute advantage in the production of
|
134. Refer to Table 3-30. Varick has an absolute advantage in the production of
|
135. Refer to Table 3-30. Falda has a comparative advantage in the production of
|
136. Refer to Table 3-30. Varick has a comparative advantage in the production of
|
| Figure 3-13
Peru’s Production Possibilities Frontier |
137. Refer to Figure 3-13. Suppose Peru decides to increase its production of rubies by 30. What is the opportunity cost of this decision?
|
138. Refer to Figure 3-13. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision?
|
139. Refer to Figure 3-13. Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar. Which of the following combinations of emeralds and rubies could Peru then consume, assuming Peru specializes in emerald production?
|
Figure 3-14
|
140. Refer to Figure 3-14. Arturo’s opportunity cost of one burrito is
|
141. Refer to Figure 3-14. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by
|
142. Refer to Figure 3-14. Which of the following is not correct?
|
143. Refer to Figure 3-14. Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo. Which of the following combinations of tacos and burritos could Dina then consume, assuming Dina specializes in taco production and Arturo specializes in burrito production?
|
144. Refer to Figure 3-14. Arturo has an absolute advantage in the production of
|
145. Refer to Figure 3-14. Dina has an absolute advantage in the production of
|
146. Refer to Figure 3-14. Arturo should specialize in the production of
|
147. Refer to Figure 3-14. If Arturo and Dina switch from each person dividing their time equally between the production of tacos and burritos to each person spending all of their time producing the good in which they have a comparative advantage, then total production of burritos will increase by
|
148. Refer to Figure 3-14. At which of the following prices would both Arturo and Dina gain from trade with each other?
|
149. Refer to Figure 3-14. Arturo and Dina would not be able to gain from trade if Dina’s opportunity cost of one taco changed to
|
150. Refer to Figure 3-14. Without trade, Arturo produced and consumed 240 tacos and 120 burritos and Dina produced and consumed 100 tacos and 150 burritos. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. As a result, Arturo gained
|
Figure 3-15
|
151. Refer to Figure 3-15. The opportunity cost of 1 novel for Perry is
|
152. Refer to Figure 3-15. The opportunity cost of 1 novel for Jordan is
|
153. Refer to Figure 3-15. The opportunity cost of 1 poem for Perry is
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154. Refer to Figure 3-15. The opportunity cost of 1 poem for Jordan is
|
155. Refer to Figure 3-15. Which of the following is not correct?
|
156. Refer to Figure 3-15. Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production?
|
157. Refer to Figure 3-15. Perry has an absolute advantage in the production of
|
158. Refer to Figure 3-15. Perry has a comparative advantage in the production of
|
159. Refer to Figure 3-15. Perry should specialize in the production of
|
160. Refer to Figure 3-15. Jordan should specialize in the production of
|
161. Refer to Figure 3-15. If Perry and Jordan switch from each person dividing their time equally between the production of novels and poems to each person spending all of their time producing the good in which they have a comparative advantage, then total production of novels will increase by
|
162. Refer to Figure 3-15. If Perry and Jordan each spends all of his/her time producing the good in which s/he has a comparative advantage and trade takes place at a price of 1 novel for 7 poems, then
|
Figure 3-16
|
163. Refer to Figure 3-16. Hosne’s opportunity cost of one purse is
|
164. Refer to Figure 3-16. Hosne’s opportunity cost of one wallet is
|
165. Refer to Figure 3-16. Hosne has an absolute advantage in the production of
|
166. Refer to Figure 3-16. Hosne has a comparative advantage in the production of
|
167. Refer to Figure 3-16. Hosne should specialize in the production of
|
168. Refer to Figure 3-16. Merve should specialize in the production of
|
169. Refer to Figure 3-16. If Hosne and Merve switch from each person dividing her time equally between the production of purses and wallets to each person spending all of her time producing the good in which she has a comparative advantage, then total production of purses will increase by
|
170. Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each other?
|
Figure 3-17
|
171. Refer to Figure 3-17. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision?
|
172. Refer to Figure 3-17. Suppose Daisy decides to increase her production of pies by 6. What is the opportunity cost of this decision?
|
173. Refer to Figure 3-17. Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy. Which of the following combinations of pies and tarts could Maxine not then consume, assuming Maxine specializes in making pies and Daisy specializes in making tarts?
|
174. Refer to Figure 3-17. Maxine has an absolute advantage in the production of
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175. Refer to Figure 3-17. Daisy has an absolute advantage in the production of
|
176. Refer to Figure 3-17. If Maxine and Daisy switch from each person dividing her time equally between the production of pies and tarts to each person spending all of her time producing the good in which she has a comparative advantage, then total production of tarts will increase by
|
177. Refer to Figure 3-17. At which of the following prices would both Maxine and Daisy gain from trade with each other?
|
Figure 3-18
|
178. Refer to Figure 3-18. The opportunity cost of 1 bowl for Bintu is
|
179. Refer to Figure 3-18. The opportunity cost of 1 bowl for Juba is
|
180. Refer to Figure 3-18. The opportunity cost of 1 cup for Bintu is
|
181. Refer to Figure 3-18. The opportunity cost of 1 cup for Juba is
|
182. Refer to Figure 3-18. Suppose Juba is willing to trade one bowl to Bintu for every two cups that Bintu makes and sends to Juba. Which of the following combinations of bowls and cups could Bintu then consume, assuming Bintu specializes in making cups and Juba specializes in making bowls?
|
183. Refer to Figure 3-18. Bintu has an absolute advantage in the production of
|
184. Refer to Figure 3-18. Bintu has a comparative advantage in the production of
|
185. Refer to Figure 3-18. If Bintu and Juba switch from each person dividing her time equally between the production of cups and bowls to each person spending all of her time producing the good in which she has a comparative advantage, then total production will increase by
|
Figure 3-19
|
186. Refer to Figure 3-19. Chile’s opportunity cost of one pound of coffee is
|
187. Refer to Figure 3-19. Chile’s opportunity cost of one pound of soybeans is
|
188. Refer to Figure 3-19. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by
|
189. Refer to Figure 3-19. Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by
|
190. Refer to Figure 3-19. Chile has an absolute advantage in the production of
|
191. Refer to Figure 3-19. Chile has a comparative advantage in the production of
|
192. Refer to Figure 3-19. If Chile and Colombia switch from each country dividing its time equally between the production of coffee and soybeans to each country spending all of its time producing the good in which it has a comparative advantage, then total production of soybeans will increase by
|
193. Refer to Figure 3-19. At which of the following prices would both Chile and Colombia gain from trade with each other?
|
194. Refer to Figure 3-19. If Chile and Colombia each spends all of its time producing the good in which it has a comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds of soybeans, then Chile will consume
|
195. Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombia’s opportunity cost of one pound of soybeans changed to
|
Figure 3-20
|
196. Refer to Figure 3-20. Canada’s opportunity cost of one unit of Good X is
|
197. Refer to Figure 3-20. Canada’s opportunity cost of one unit of Good Y is
|
198. Refer to Figure 3-20. Canada would incur an opportunity cost of 6 units of Good X if it increased its production of Good Y by
|
199. Refer to Figure 3-20. Mexico would incur an opportunity cost of 8 units of Good X if it increased its production of Good Y by
|
200. Refer to Figure 3-20. Canada has an absolute advantage in the production of
|
201. Refer to Figure 3-20. Canada has a comparative advantage in the production of
|
202. Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good X will increase by
|
203. Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good Y will increase by
|
204. Refer to Figure 3-20. At which of the following prices would both Canada and Mexico gain from trade with each other?
|
Figure 3-21
|
205. Refer to Figure 3-21. Azerbaijan’s opportunity cost of one nail is
|
206. Refer to Figure 3-21. Azerbaijan’s opportunity cost of one bolt is
|
207. Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision?
|
208. Refer to Figure 3-21. Suppose Azerbaijan decides to increase its production of nails by 20. What is the opportunity cost of this decision?
|
209. Refer to Figure 3-21. Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan. Which of the following combinations of bolts and nails could Azerbaijan then consume, assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?
|
210. Refer to Figure 3-21. Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for every bolt that Uzbekistan makes and sends to Azerbaijan. Which of the following combinations of bolts and nails could Uzbekistan then consume, assuming Uzbekistan specializes in making bolts and Azerbaijan specializes in making nails?
|
211. Refer to Figure 3-21. Azerbaijan has an absolute advantage in the production of
|
212. Refer to Figure 3-21. If Uzbekistan and Azerbaijan switch from each country dividing its time equally between the production of bolts and nails to each country spending all of its time producing the good in which it has a comparative advantage, then total production will increase by
|
213. Refer to Figure 3-21. If Uzbekistan and Azerbaijan each spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 bolts for 36 nails, then
|
214. Refer to Figure 3-21. Without trade, Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails. As a result, Uzbekistan gained
|
| Figure 3-22 Alice and Betty’s Production Possibilities in one 8-hour day.
|
215. Refer to Figure 3-22. What are Alice and Betty’s opportunity costs of 1 pizza?
|
216. Refer to Figure 3-22. What are Alice and Betty’s opportunity costs of 1 pitcher of lemonade?
|
217. Refer to Figure 3-22. Which of the following statements is correct regarding absolute advantage?
|
218. Refer to Figure 3-22. Which of the following statements is correct regarding comparative advantage?
|
219. Refer to Figure 3-22. Which of the following prices would result in an mutually advantageous trade for Alice and Betty?
|
| Table 3-31
|
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220. Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of meat is
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221. Refer to Table 3-31. For the farmer, the opportunity cost of 15 pounds of meat is
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222. Refer to Table 3-31. For the rancher, the opportunity cost of 1 pound of meat is
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223. Refer to Table 3-31. For the rancher, the opportunity cost of 16 pounds of meat is
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224. Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of potatoes is
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225. Refer to Table 3-31. For the farmer, 12.8 pounds of
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226. Refer to Table 3-31. In 10 hours,
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227. Refer to Table 3-31. Relative to the farmer, the rancher has an absolute advantage in the production of
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228. Refer to Table 3-31. Relative to the rancher, the farmer has a comparative advantage in the production of
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229. Refer to Table 3-31. Relative to the rancher, the farmer has
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| Figure 3-23 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. |
230. Refer to Figure 3-23. For Bonovia, what is the opportunity cost of a pound of cheese?
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231. Refer to Figure 3-23. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by
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232. Refer to Figure 3-23. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if
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233. Refer to Figure 3-23. In the nation of Cropitia, the opportunity cost of a pound of cheese is 1.5 pounds of ham. Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for
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234. Refer to Figure 3-23. In the nation of Cropitia, the opportunity cost of a pound of ham is 0.3 pounds of cheese. Bonovia and Cropitia both can gain from trading with one another if one pound of ham trades for
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Table 3-32
US and French Production Opportunities
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235. Refer to Table 3-32 The US has a comparative advantage in the production of
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236. Refer to Table 3-32 France has an absolute advantage in the production of
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237. Refer to Table 3-32 The opportunity costs for the US and France are as follows:
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| Table 3-33 Chris and Tony’s Production Opportunities
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238. Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris’s opportunity cost of 1 lb. of tomatoes is
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239. Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. If Chris and Tony both decide to specialize and produce only the good in which they have a comparative advantage, then
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240. Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following statements is correct?
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241. Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following prices would result in a mutually advantageous trade between Chris and Tony?
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242. Adam Smith
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243. Adam Smith asserted that a person should never attempt to make at home
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244. Which famous economist developed the principle of comparative advantage as we know it today?
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245. Which of the following is not correct?
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246. Economists generally support
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| Table 3-34
Assume that Indonesia and India can switch between producing rice and bananas at a constant rate.
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247. Refer to Table 3-34. Indonesia’s opportunity cost of producing bananas is
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248. Refer to Table 3-34. India’s opportunity cost of producing rice is
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249. Refer to Table 3-34. For which good(s) does Indonesia have a comparative advantage
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250. Refer to Table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?
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Table 3-35
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251. Refer to Table 3-35. Denmark’s opportunity cost of producing 1dozen eggs is
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252. Refer to Table 3-35. Finland’s opportunity cost of producing 1 unit of ham is
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253. Refer to Table 3-35. Which good(s) does Denmark have an absolute advantage producing?
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254. Refer to Table 3-35. Which good(s) does Finland have an absolute advantage producing?
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255. Refer to Table 3-35. At which of the following prices, if any, could both Denmark and Finland gain from trade?
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Figure 3-24
The production possibilities frontiers below show how much Bob and Betty can each produce in 8 hours of time.
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256. Refer to Figure 3-24. Bob has
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257. Refer to Figure 3-24. Betty has
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Table 3-36
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258. Refer to Table 3-36. What is Antigua’s opportunity cost of one towel?
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259. Refer to Table 3-36. What is Antigua’s opportunity cost of one umbrella?
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260. Refer to Table 3-36. What is Barbuda’s opportunity cost of one towel?
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261. Refer to Table 3-36. What is Barbuda’s opportunity cost of one umbrella?
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262. Refer to Table 3-36. Antigua has an absolute advantage in the production of
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263. Refer to Table 3-36. Antigua has a comparative advantage in the production of
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264. Refer to Table 3-36. If Antigua and Barbuda decide to trade with each other, Antigua should specialize in the production of
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265. Refer to Table 3-36. Assume that Antigua and Barbuda each has 60 minutes available. If each island spends all its time producing the good in which it has a comparative advantage, then total production is
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Table 3-37
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266. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery.
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267. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah’s opportunity cost to produce one vase is
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268. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah has an absolute advantage in
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269. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah should specialize in the production of
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270. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Suppose that Sarah and Charles produce for two 6-hour sessions and they split this time equally between the production of vases and mugs. If they then produce for two 6-hour sessions and produce only the good that each person has the comparative advantage for, then total production of
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271. Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah and Charles could benefit from trading with each other if they traded at a price of
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Table 3-38
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272. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. Based upon the information in the table, we can determine that
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273. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. Using the information from the table, Iowa’s opportunity cost of producing one bushel of corn is
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274. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From the table we know that Iowa has a
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275. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From the table we know that Nebraska has a
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276. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From this table, we know that Nebraska has an absolute advantage in the production of
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277. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn and soybeans each state can produce in one growing season. From this table, we can conclude that Iowa should specialize in the production of
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278. Refer to Table 3-38. Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. At which of the following prices would both Iowa and Nebraska be able to gain from trade with each other?
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1. Which of the following is not an example of the principle that trade can make everyone better off?
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
