Interdependence and the Gains from Trade 547
99.
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?
a.
2 hours
b.
4 hours
c.
8 hours
d.
16 hours
100.
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?
a.
1/8 hour
b.
1/2 hour
c.
2 hours
d.
8 hours
101.
Refer to Figure 3-7. If Bintu and Juba both spend all of their time making bowls, then total
production is
a.
2 bowls.
b.
3 bowls.
c.
4 bowls.
d.
6 bowls.
102.
Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls
and making cups,
then total production is
a.
2 bowls and 6 cups.
b.
3 bowls and 7 cups.
c.
4 bowls and 8 cups.
d.
6 bowls and 14 cups.
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
make in a given 4-hour production period?
a.
1 bowl and 14 cups
b.
2 bowls and 11 cups
c.
3 bowls and 10 cups
d.
5 bowls and 5 cups
104.
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?
a.
3 bowls and 9.5 cups
b.
4.5 bowls and 6 cups
c.
5 bowls and 4 cups
d.
6 bowls and 1 cups
550 Interdependence and the Gains from Trade
Figure 3-8
Chile’s Production Possibilities Frontier Colombia’s Production Possibilities Frontier
105.
Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making
coffee and making
soybeans, then total production is
a.
12 pounds of coffee and 12 pounds of soybeans.
b.
14 pounds of coffee and 9 pounds of soybeans.
c.
16 pounds of coffee and 6 pounds of soybeans.
d.
28 pounds of coffee and 18 pounds of soybeans.
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 coffee and soybeans could Chile and
Colombia together make in a given day?
a.
4 pounds of coffee and 16 pounds of soybeans
b.
8 pounds of coffee and 15 pounds of soybeans
c.
16 pounds of coffee and 10 pounds of soybeans
d.
24 pounds of coffee and 4 pounds of soybeans
107.
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?
a.
4 pounds of coffee and 17 pounds of soybeans
b.
8 pounds of coffee and 14 pounds of soybeans
c.
16 pounds of coffee and 9 pounds of soybeans
d.
24 pounds of coffee and 3 pounds of soybeans
552 Interdependence and the Gains from Trade
Figure 3-9
Uzbekistan’s Production Possibilities Frontier Azerbaijan’s Production Possibilities Frontier
108.
Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between
making bolts and making
nails, then total production is
a.
15 bolts and 40 nails.
b.
25 bolts and 70 nails.
c.
30 bolts and 80 nails.
d.
50 bolts and 140 nails.
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 make in a given 2-
day production period?
a.
12 bolts and 120 nails
b.
24 bolts and 96 nails
c.
38 bolts and 50 nails
d.
44 bolts and 24 nails
110.
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?
a.
9 bolts and 122 nails
b.
21 bolts and 98 nails
c.
36 bolts and 56 nails
d.
47 bolts and 18 nails
554 Interdependence and the Gains from Trade
Figure 3–10
Alice and Betty’s Production Possibilities in one 8-hour day.
Alice’s Production Possibilities Frontier Betty’s Production Possibilities Frontier
111.
Refer to Figure 3-10. Both Alice and Betty
a.
face a constant trade-off between producing pitchers of lemonade and pizzas.
b.
can produce more pizzas than pitchers of lemonade if they devote all of their time to pizza
production.
c.
would benefit from specializing in lemonade production.
d.
would benefit from specializing in pizza production.
112.
Refer to Figure 3-10. If Alice produces only lemonade, she can produce
a.
200 pitchers per day.
b.
300 pitchers per day.
c.
400 pitchers per day.
d.
450 pitchers per day.
113.
Refer to Figure 3-10. If point A represents Alice’s production and point B represents Betty’s
production,
a.
Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of
lemonade and
180 pizzas.
b.
Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of
lemonade and
100 pizzas.
c.
Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of
lemonade and
180 pizzas.
d.
Only Alice can benefit from specialization and trade.
114.
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?
a.
Alice produces more pizzas and Betty produces more lemonade.
b.
Alice produces more lemonade and Betty produces more pizzas.
c.
Both Alice and Betty produce only pizzas.
d.
There are no circumstances under which both Alice and Betty can benefit from specialization
and trade.
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.
115.
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?
a.
3/5 hour
b.
3/4 hour
c.
4/3 hours
d.
5/3 hours
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 produce
in 240 hours?
a.
225 pounds of ham and 140 pounds of cheese
b.
280 pounds of ham and 100 pounds of cheese
c.
355 pounds of ham and 80 pounds of cheese
d.
330 pounds of ham and 60 pounds of cheese
117.
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?
a.
250 pounds of ham and 120 pounds of cheese
b.
200 pounds of ham and 160 pounds of cheese
c.
160 pounds of ham and 200 pounds of cheese
d.
100 pounds of ham and 240 pounds of cheese
Figure 3–12
Argentina’s Production Possibilities Frontier Peru’s Production Possibilities Frontier
118.
Refer to Figure 3–12. If Argentina and Peru each divides its time equally between producing
corn and fish, then
total production is
a.
13 tons of corn and 15 tons of fish.
b.
13 tons of corn and 10 tons of fish.
c.
12 tons of corn and 16 tons of fish.
d.
12 tons of corn and 11 tons of fish
Multiple Choice – Section 02A: Comparative Advantage: The Driving Force of Specialization
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?
a.
(200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars)
b.
(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)
c.
(300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)
d.
(300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)
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?
a.
(200 cashews, 30,000 peanuts) and (150 cashews, 35,000 peanuts)
b.
(200 cashews, 40,000 peanuts) and (150 cashews, 30,000 peanuts)
c.
(300 cashews, 60,000 peanut) and (200 cashews, 50,000 peanuts)
d.
(300 cashews, 60,000 peanuts) and (200 cashews, 80,000 peanuts)
3.
What must be given up to obtain an item is called
a.
out–of–pocket cost.
b.
comparative worth.
c.
opportunity cost.
d.
absolute value.
4.
The opportunity cost of an item is
a.
the number of hours that one must work in order to buy one unit of the item.
b.
what you give up to get that item.
c.
always less than the dollar value of the item.
d.
always greater than the cost of producing the item.
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
a.
is equal to 0.
b.
is between 0 and 1.
c.
is equal to 1.
d.
is greater than 1.
6.
If Korea is capable of producing either shoes or soccer balls or some combination of the two, then
a.
Korea should specialize in the product in which it has an absolute advantage.
b.
it would be impossible for Korea to have an absolute advantage over another country in both
products.
c.
it would be difficult for Korea to benefit from trade with another country if Korea is efficient in
the
production of both goods.
d.
Korea’s opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
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
a.
0.63 bushels of squash.
b.
1.6 bushels of squash.
c.
3 bushels of squash.
d.
5 bushels of squash.
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
a.
2/5 bushel of squash.
b.
5/2 bushels of squash.
c.
2 bushels of squash.
d.
5 bushels of squash.
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
a.
1/6 table for Ken and 1/3 table for Traci.
b.
1/6 table for Ken and 3 tables for Traci.
c.
6 tables for Ken and 1/3 table for Traci.
d.
6 tables for Ken and 3 tables for Traci.
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
a.
1/6 chair for Ken and 1/3 chair for Traci.
b.
1/6 chair for Ken and 3 chairs for Traci.
c.
6 chairs for Ken and 1/3 chair for Traci.
d.
6 chairs for Ken and 3 chairs for Traci.
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
a.
if he devotes all of his available resources to watermelon production, then he can produce 80
watermelons.
b.
he cannot have a comparative advantage over other farmers in producing cantaloupes.
c.
his opportunity cost of one watermelon is 2/3 of a cantaloupe.
d.
his production possibilities frontier is bowed-out.
12.
Absolute advantage is found by comparing different producers’
a.
opportunity costs.
b.
payments to land, labor, and capital.
c.
input requirements per unit of output.
d.
locational and logistical circumstances.
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,
a.
has a low opportunity cost of producing that good, relative to the opportunity costs of other
producers.
b.
has a comparative advantage in the production of that good.
c.
has an absolute advantage in the production of that good.
d.
should be the only producer of that good.
14.
If Shawn can produce more donuts in one day than Sue can produce in one day, then
a.
Shawn has a comparative advantage in the production of donuts.
b.
Sue has a comparative advantage in the production of donuts.
c.
Shawn has an absolute advantage in the production of donuts.
d.
Sue has an absolute advantage in the production of donuts.
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
a.
Ken has an absolute advantage in chairs.
b.
Ken has a comparative advantage in tables.
c.
Traci has an absolute advantage in chairs.
d.
Traci has a comparative advantage in chairs.