Interdependence and the Gains from Trade 627
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.
642 Interdependence and the Gains from 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