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122.03.2 - MC - MANK08
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
a.
0.
b.
1.5.
c.
3.
d.
9.
124. Refer to Table 3-27. At which of the following prices would both Huang and Min gain from trade with each other?
a.
15 parasols for 10 plates
b.
15 parasols for 6 plates
c.
15 parasols for 3 plates
d.
Huang and Min could not both gain from trade with each other at any price.
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.
Minutes Needed to
Number of Computers Set Up or Tested in a 40-Hour Week
Set Up 1 Computer
Test 1 Computer
Computers Set Up
Computers Tested
Barb
48
?
50
40
Jim
30
40
80
60
125. Refer to Table 3-28. Barb’s opportunity cost of setting up one computer is testing
a.
4/5 computer and Jim’s opportunity cost of setting up one computer is testing 3/4 computer.
b.
4/5 computer and Jim’s opportunity cost of setting up one computer is testing 4/3 computers.
c.
5/4 computers and Jim’s opportunity cost of setting up one computer is testing 3/4 computer.
d.
5/4 computers and Jim’s opportunity cost of setting up one computer is testing 4/3 computers.
126. Refer to Table 3-28. Barb’s opportunity cost of testing one computer is setting up
a.
4/5 computer and Jim’s opportunity cost of testing one computer is setting up 3/4 computer.
b.
4/5 computer and Jim’s opportunity cost of testing one computer is setting up 4/3 computers.
c.
5/4 computers and Jim’s opportunity cost of testing one computer is setting up 3/4 computer.
d.
5/4 computers and Jim’s opportunity cost of testing one computer is setting up 4/3 computers.
127. Refer to Table 3-28. Barb has an absolute advantage in
a.
both setting up and testing computers and a comparative advantage in setting up computers.
b.
both setting up and testing computers and a comparative advantage in testing computers.
c.
neither setting up nor testing computers and a comparative advantage in setting up computers.
d.
neither setting up nor testing computers and a comparative advantage in testing computers.
128. Refer to Table 3-28. Jim has an absolute advantage in
a.
both setting up and testing computers and a comparative advantage in setting up computers.
b.
both setting up and testing computers and a comparative advantage in testing computers.
c.
neither setting up nor testing computers and a comparative advantage in setting up computers.
d.
neither setting up nor testing computers and a comparative advantage in testing computers.
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.
Minutes Needed to
Number of Cellular Phones Programmed or Tested in a 40-Hour
Week
Program 1 Cellular
Phone
Test 1 Cellular
Phone
Cellular Phones Programmed
Cellular Phones Tested
Juanita
?
2
160
1200
Shantala
10
4
240
600
129. Refer to Table 3-29. Juanita has an absolute advantage in
a.
programming cellular phones and a comparative advantage in programming cellular phones.
b.
programming cellular phones and a comparative advantage in testing cellular phones.
c.
testing cellular phones and a comparative advantage in programming cellular phones.
d.
testing cellular phones and a comparative advantage in testing cellular phones.
130. Refer to Table 3-29. Juanita’s opportunity cost of programming one cellular phone is testing
a.
7.5 cellular phones and Shantala’s opportunity cost of programming one cellular phone is testing 5/2 cellular
phones.
b.
2/15 cellular phones and Shantala’s opportunity cost of programming one cellular phone is testing 5/2 cellular
phones.
c.
7.5 cellular phones and Shantala’s opportunity cost of programming one cellular phone is testing 2/5 cellular
phones.
d.
2/15 cellular phones and Shantala’s opportunity cost of programming one cellular phone is testing 2/5 cellular
phones.
131. Refer to Table 3-29. Juanita’s opportunity cost of testing one cellular phone is programming
a.
0.133 cellular phones and Shantala’s opportunity cost of testing one cellular phone is programming 2.5
cellular phones.
b.
0.133 cellular phones and Shantala’s opportunity cost of testing one cellular phone is programming 0.4
cellular phones.
c.
7.5 cellular phones and Shantala’s opportunity cost of testing one cellular phone is programming 2.5 cellular
phones.
d.
7.5 cellular phones and Shantala’s opportunity cost of testing one cellular phone is programming 0.4 cellular
phones.
132. Refer to Table 3-29. Shantala has an absolute advantage in
a.
programming cellular phones and a comparative advantage in programming cellular phones.
b.
programming cellular phones and a comparative advantage in testing cellular phones.
c.
testing cellular phones and a comparative advantage in programming cellular phones.
d.
testing cellular phones and a comparative advantage in testing cellular phones.
Table 3-30
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
Quantity Produced in 1 Hour
Bushels of Wheat
Yards of Cloth
Falda
8
12
Varick
6
15
133. Refer to Table 3-30. Falda has an absolute advantage in the production of
a.
wheat.
b.
cloth.
c.
both goods.
d.
neither good.
134. Refer to Table 3-30. Varick has an absolute advantage in the production of
a.
wheat.
b.
cloth.
c.
both goods.
d.
neither good.
135. Refer to Table 3-30. Falda has a comparative advantage in the production of
a.
wheat.
b.
cloth.
c.
both goods.
d.
neither good.
136. Refer to Table 3-30. Varick has a comparative advantage in the production of
a.
wheat.
b.
cloth.
c.
both goods.
d.
neither good.
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?
a.
1/8 emerald
b.
1/3 emerald
c.
1 emerald
d.
3 emeralds
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?
a.
30 rubies
b.
40 rubies
c.
60 rubies
d.
120 rubies
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?
a.
2 emeralds and 240 rubies
b.
3 emeralds and 220 rubies
c.
4 emeralds and 200 rubies
d.
5 emeralds and 140 rubies
Figure 3-14
Arturo’s Production Possibilities Frontier
Dina’s Production Possibilities Frontier
140. Refer to Figure 3-14. Arturo’s opportunity cost of one burrito is
a.
3/4 taco and Dina’s opportunity cost of one burrito is 1/2 taco.
b.
3/4 taco and Dina’s opportunity cost of one burrito is 2 tacos.
c.
4/3 tacos and Dina’s opportunity cost of one burrito is 1/2 taco.
d.
4/3 tacos and Dina’s opportunity cost of one burrito is 2 tacos.
141. Refer to Figure 3-14. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos
by
a.
27.
b.
48.
c.
108.
d.
144.
142. Refer to Figure 3-14. Which of the following is not correct?
a.
Arturo and Dina could each consume 100 tacos and 100 burritos without trade.
b.
Neither Arturo nor Dina could each consume 200 tacos and 200 burritos without trade.
c.
Arturo and Dina could each consume 200 tacos and 200 burritos with trade.
d.
Total consumption of burritos could not be 600 either with or without trade.
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?
a.
100 tacos and 200 burritos
b.
200 tacos and 130 burritos
c.
300 tacos and 60 burritos
d.
340 tacos and 40 burritos
144. Refer to Figure 3-14. Arturo has an absolute advantage in the production of
a.
burritos and a comparative advantage in the production of tacos.
b.
burritos and a comparative advantage in the production of burritos.
c.
neither good and a comparative advantage in the production of tacos.
d.
neither good and a comparative advantage in the production of burritos.
145. Refer to Figure 3-14. Dina has an absolute advantage in the production of
a.
burritos and a comparative advantage in the production of tacos.
b.
burritos and a comparative advantage in the production of burritos.
c.
neither good and a comparative advantage in the production of tacos.
d.
neither good and a comparative advantage in the production of burritos.
146. Refer to Figure 3-14. Arturo should specialize in the production of
a.
tacos and Dina should specialize in the production of burritos.
b.
burritos and Dina should specialize in the production of tacos.
c.
both goods and Dina should specialize in the production of neither good.
d.
neither good and Dina should specialize in the production of both goods.
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
a.
50.
b.
100.
c.
150.
d.
300.
148. Refer to Figure 3-14. At which of the following prices would both Arturo and Dina gain from trade with each other?
a.
12 burritos for 21 tacos
b.
12 burritos for 27 tacos
c.
12 burritos for 36 tacos
d.
Arturo and Dina could not both gain from trade with each other at any price.
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
a.
1/2 burrito.
b.
3/4 burrito.
c.
4/3 burritos.
d.
2 burritos.
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
a.
20 tacos and 24 burritos and Dina gained 40 tacos and 6 burritos.
b.
20 tacos and 36 burritos and Dina gained 160 tacos and 6 burritos.
c.
260 tacos and 144 burritos and Dina gained 140 tacos and 156 burritos.
d.
260 tacos and 156 burritos and Dina gained 260 tacos and 156 burritos.
Figure 3-15
Perry’s Production Possibilities Frontier
Jordan’s Production Possibilities Frontier
151. Refer to Figure 3-15. The opportunity cost of 1 novel for Perry is
a.
1/6 poem.
b.
2 poems.
c.
6 poems.
d.
12 poems.
152. Refer to Figure 3-15. The opportunity cost of 1 novel for Jordan is
a.
1/3 poem.
b.
3 poems.
c.
4 poems.
d.
12 poems.
153. Refer to Figure 3-15. The opportunity cost of 1 poem for Perry is
a.
1/12 novel.
b.
1/6 novel.
c.
2 novels.
d.
6 novels.
154. Refer to Figure 3-15. The opportunity cost of 1 poem for Jordan is
a.
1/2 novel.
b.
1/3 novel.
c.
3 novels.
d.
4 novels.
155. Refer to Figure 3-15. Which of the following is not correct?
a.
Perry and Jordan could each consume 2 novels and 6 poems without trade.
b.
Jordan could consume 2 novels and 6 poems both with and without trade.
c.
Perry and Jordan could each consume 2 novels and 6 poems with trade.
d.
Perry and Jordan could each consume 12 poems without trade.
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?
a.
1 novel and 14 poems
b.
2 novels and 8 poems
c.
3 novels and 6 poems
d.
4 novels and 2 poems
157. Refer to Figure 3-15. Perry has an absolute advantage in the production of
a.
novels and Jordan has an absolute advantage in the production of poems.
b.
poems and Jordan has an absolute advantage in the production of novels.
c.
novels and Jordan has an absolute advantage in the production of neither good.
d.
neither good and Jordan has an absolute advantage in the production of novels.
158. Refer to Figure 3-15. Perry has a comparative advantage in the production of
a.
novels and Jordan has a comparative advantage in the production of poems.
b.
poems and Jordan has a comparative advantage in the production of novels.
c.
novels and Jordan has a comparative advantage in the production of neither good.
d.
neither good and Jordan has a comparative advantage in the production of novels.
159. Refer to Figure 3-15. Perry should specialize in the production of
a.
novels.
b.
poems.
c.
both goods.
d.
neither good.
160. Refer to Figure 3-15. Jordan should specialize in the production of
a.
novels.
b.
poems.
c.
both goods.
d.
neither good.
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
a.
1.
b.
2.
c.
3.
d.
4.
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
a.
Perry and Jordan will both gain from this trade.
b.
Perry will gain from this trade, but Jordan will not.
c.
Jordan will gain from this trade, but Perry will not.
d.
neither Perry nor Jordan will gain from this trade.
Figure 3-16
Hosne’s Production Possibilities Frontier
Merve’s Production Possibilities Frontier
163. Refer to Figure 3-16. Hosne’s opportunity cost of one purse is
a.
4/5 wallet and Merve’s opportunity cost of one purse is 2/3 wallet.
b.
4/5 wallet and Merve’s opportunity cost of one purse is 3/2 wallets.
c.
5/4 wallets and Merve’s opportunity cost of one purse is 2/3 wallet.
d.
5/4 wallets and Merve’s opportunity cost of one purse is 3/2 wallets.
164. Refer to Figure 3-16. Hosne’s opportunity cost of one wallet is
a.
4/5 purse and Merve’s opportunity cost of one wallet is 2/3 purse.
b.
4/5 purse and Merve’s opportunity cost of one wallet is 3/2 purses.
c.
5/4 purses and Merve’s opportunity cost of one wallet is 2/3 purse.
d.
5/4 purses and Merve’s opportunity cost of one wallet is 3/2 purses.
165. Refer to Figure 3-16. Hosne has an absolute advantage in the production of
a.
purses and Merve has an absolute advantage in the production of wallets.
b.
wallets and Merve has an absolute advantage in the production of purses.
c.
both goods and Merve has an absolute advantage in the production of neither good.
d.
neither good and Merve has an absolute advantage in the production of both goods.
166. Refer to Figure 3-16. Hosne has a comparative advantage in the production of
a.
purses and Merve has a comparative advantage in the production of wallets.
b.
wallets and Merve has a comparative advantage in the production of purses.
c.
both goods and Merve has a comparative advantage in the production of neither good.
d.
neither good and Merve has a comparative advantage in the production of both goods.
167. Refer to Figure 3-16. Hosne should specialize in the production of
a.
purses.
b.
wallets.
c.
both goods.
d.
neither good.
168. Refer to Figure 3-16. Merve should specialize in the production of
a.
purses.
b.
wallets.
c.
both goods.
d.
neither good.
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
a.
2.
b.
3.
c.
5.
d.
10.
170. Refer to Figure 3-16. At which of the following prices would both Hosne and Merve gain from trade with each
other?
a.
5 wallets for 1.25 purses
b.
5 wallets for 2.5 purses
c.
5 wallets for 3.75 purses
d.
Hosne and Merve could not both gain from trade with each other at any price.
Figure 3-17
Maxine’s Production Possibilities Frontier
Daisy’s Production Possibilities Frontier
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?
a.
2/5 pie
b.
2 pies
c.
5/2 pies
d.
10 pies
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?
a.
8/3 tarts
b.
4.5 tarts
c.
8 tarts
d.
10 tarts
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?
a.
4 pies and 6 tarts
b.
6 pies and 5 tarts
c.
8 pies and 3 tarts
d.
10 pies and 1.5 tarts
174. Refer to Figure 3-17. Maxine has an absolute advantage in the production of
a.
both goods and a comparative advantage in the production of pies.
b.
both goods and a comparative advantage in the production of tarts.
c.
neither good and a comparative advantage in the production of pies.
d.
neither good and a comparative advantage in the production of tarts.
175. Refer to Figure 3-17. Daisy has an absolute advantage in the production of
a.
both goods and a comparative advantage in the production of pies.
b.
both goods and a comparative advantage in the production of tarts.
c.
neither good and a comparative advantage in the production of pies.
d.
neither good and a comparative advantage in the production of tarts.
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
a.
7.
b.
10.
c.
17.
d.
20.
177. Refer to Figure 3-17. At which of the following prices would both Maxine and Daisy gain from trade with each
other?
a.
4 tarts for 2 pies
b.
8 tarts for 12 pies
c.
12 tarts for 28 pies
d.
Maxine and Daisy could not both gain from trade with each other at any price.
Figure 3-18
Bintu’s Production Possibilities Frontier
Juba’s Production Possibilities Frontier
