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Interdependence and the Gains from Trade 607
96. Refer to Table 3-24. At which of the following prices would both England and Spain gain from
trade with each other?
a. 16 units of bread for 16 units of cheese
b. 16 units of bread for 24 units of cheese
c. 16 units of bread for 48 units of cheese
d. England and Spain could not both gain from trade with each other at any price.
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
a. 34 units of cheese and 2 units of bread and Spain will consume 6 units of cheese and 3 units of
bread.
b. 34 units of cheese and 2 units of bread and Spain will consume 16 units of cheese and 3 units
of bread.
c. 34 units of cheese and 12 units of bread and Spain will consume 6 units of cheese and 3 units
of bread.
d. 34 units of cheese and 12 units of bread and Spain will consume 16 units of cheese and 3 units
of bread.
608 Interdependence and the Gains from Trade
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
a. 0 units of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread.
b. 1 unit of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread.
c. 7 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of
bread.
d. 33 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of
bread.
Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a
constant rate.
Hours Needed
To Make 1
Amount Produced
in 40 Hours
mixer
toaster
mixers
toasters
Maya
8
5
5
8
Miguel
20
10
2
4
99. Refer to Table 3-25. The opportunity cost of 1 mixer for Maya is
a. 0.625 toasters.
b. 5 hours of labor.
c. 1.6 toasters.
d. 20 hours of labor.
Interdependence and the Gains from Trade 609
100. Refer to Table 3-25. The opportunity cost of 1 mixer for Miguel is
a. 1/2 toaster.
b. 1/2 hour of labor.
c. 2 toasters.
d. 8 hours of labor.
101. Refer to Table 3-25. The opportunity cost of 1 toaster for Maya is
a. 0.625 mixers.
b. 1.6 hours of labor.
c. 1.6 mixers.
d. 8 hours of labor.
610 Interdependence and the Gains from Trade
102. Refer to Table 3-25. The opportunity cost of 1 toaster for Miguel is
a. 1/2 mixer.
b. 2 hours of labor.
c. 2 mixers.
d. 20 hours of labor.
103. Refer to Table 3-25. Maya has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of mixers.
b. both goods and a comparative advantage in the production of toasters.
c. neither good and a comparative advantage in the production of mixers.
d. neither good and a comparative advantage in the production of toasters.
Interdependence and the Gains from Trade 611
104. Refer to Table 3-25. Miguel has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of mixers.
b. both goods and a comparative advantage in the production of toasters.
c. neither good and a comparative advantage in the production of mixers.
d. neither good and a comparative advantage in the production of toasters.
105. Refer to Table 3-25. Maya should specialize in the production of
a. mixers and Miguel should specialize in the production of toasters.
b. toasters and Miguel should specialize in the production of mixers.
c. both goods and Miguel should specialize in the production of neither good.
d. neither good and Miguel should specialize in the production of both goods.
612 Interdependence and the Gains from Trade
106. Refer to Table 3-25. At which of the following prices would both Maya and Miguel gain from
trade with each other?
a. 4 mixers for 7 toasters
b. 8 mixers for 10 toasters
c. 12 mixers for 18 toasters
d. Maya and Miguel could not both gain from trade with each other at any price.
Table 3-26
Assume that Japan and Korea can switch between producing cars and producing airplanes at a
constant rate.
Hours Needed
to Make 1
Quantity Produced
in 2400 Hours
Car
Airplane
Cars
Airplanes
Japan
30
150
80
16
Korea
50
150
48
16
107. Refer to Table 3-26. Japan’s opportunity cost of one airplane is
a. 1/5 car and Korea’s opportunity cost of one airplane is 1/3 car.
b. 1/5 car and Korea’s opportunity cost of one airplane is 3 cars.
c. 5 cars and Korea’s opportunity cost of one airplane is 1/3 car.
d. 5 cars and Korea’s opportunity cost of one airplane is 3 cars.
Interdependence and the Gains from Trade 613
108. Refer to Table 3-26. Japan’s opportunity cost of one car is
a. 1/5 airplane and Korea’s opportunity cost of one car is 1/3 airplane.
b. 1/5 airplane and Korea’s opportunity cost of one car is 3 airplanes.
c. 5 airplanes and Korea’s opportunity cost of one car is 1/3 airplane.
d. 5 airplanes and Korea’s opportunity cost of one car is 3 airplanes.
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?
a. 9 airplanes
b. 15 airplanes
c. 135 airplanes
d. 225 airplanes
614 Interdependence and the Gains from Trade
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?
a. 3 airplanes
b. 6 airplanes
c. 16 airplanes
d. 150 airplanes
111. Refer to Table 3-26. Japan has an absolute advantage in the production of
a. cars and a comparative advantage in the production of cars.
b. cars and a comparative advantage in the production of airplanes.
c. neither good and a comparative advantage in the production of cars.
d. neither good and a comparative advantage in the production of airplanes.
Interdependence and the Gains from Trade 615
112. Refer to Table 3-26. Korea has an absolute advantage in the production of
a. cars and a comparative advantage in the production of cars.
b. cars and a comparative advantage in the production of airplanes.
c. neither good and a comparative advantage in the production of cars.
d. neither good and a comparative advantage in the production of airplanes.
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
a. 16.
b. 40.
c. 64.
d. 80.
616 Interdependence and the Gains from Trade
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
a. 1/5 airplane.
b. 1/3 airplane.
c. 3 airplanes.
d. 5 airplanes.
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
a. Japan and Korea will both gain from this trade.
b. Japan will gain from this trade, but Korea will not.
c. Korea will gain from this trade, but Japan will not.
d. neither Japan nor Korea will gain from this trade.
Interdependence and the Gains from Trade 617
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
a. 0 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
b. 2 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
c. 28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
d. 52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
Table 3-27
Assume that Huang and Min can switch between producing parasols and producing porcelain
plates at a constant rate.
Labor Hours Needed
to Make 1
Quantity Produced
in 36 Hours
Parasol
Plate
Parasol
Plate
Huang
2
6
18
6
Min
2
4
18
9
117. Refer to Table 3-27. The opportunity cost of 1 parasol for Huang is
a. 1/3 plate.
b. 1/2 plate.
c. 3 plates.
d. 6 plates.
618 Interdependence and the Gains from Trade
118. Refer to Table 3-27. The opportunity cost of 1 parasol for Min is
a. 1/3 plate.
b. 1/2 plate.
c. 2 plates.
d. 3 plates.
119. Refer to Table 3-27. The opportunity cost of 1 plate for Huang is
a. 1/3 parasol.
b. 1/2 parasol.
c. 3 parasols.
d. 4 parasols.
Interdependence and the Gains from Trade 619
120. Refer to Table 3-27. The opportunity cost of 1 plate for Min is
a. 1/3 parasol.
b. 1/2 parasol.
c. 2 parasols.
d. 3 parasols.
121. Refer to Table 3-27. Huang has an absolute advantage in the production of
a. parasols and a comparative advantage in the production of parasols.
b. parasols and a comparative advantage in the production of plates.
c. neither good and a comparative advantage in the production of parasols.
d. neither good and a comparative advantage in the production of plates.
620 Interdependence and the Gains from Trade
122. Refer to Table 3-27. Min has an absolute advantage in the production of
a. plates and a comparative advantage in the production of plates.
b. parasols and a comparative advantage in the production of plates.
c. neither good and a comparative advantage in the production of parasols.
d. neither good and a comparative advantage in the production of plates.
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.
Interdependence and the Gains from Trade 621
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.
622 Interdependence and the Gains from Trade
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.
Interdependence and the Gains from Trade 623
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.
624 Interdependence and the Gains from Trade
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.
Interdependence and the Gains from Trade 625
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.
626 Interdependence and the Gains from Trade
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.
