Interdependence and the Gains from Trade 587
57. Refer to Table 3-20. Brad has a comparative advantage in the production of
a. wheat and Theresa has a comparative advantage in the production of beef.
b. beef and Theresa has a comparative advantage in the production of wheat.
c. both goods and Theresa has a comparative advantage in the production of neither good.
d. neither good and Theresa has a comparative advantage in the production of both goods.
58. Refer to Table 3-20. Brad should specialize in the production of
a. wheat and Theresa should specialize in the production of beef.
b. beef and Theresa should specialize in the production of wheat.
c. both goods and Theresa should specialize in the production of neither good.
d. neither good and Theresa should specialize in the production of both goods.
588 Interdependence and the Gains from Trade
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
a. 6 bushels of wheat and 6 pounds of beef.
b. 10 bushels of wheat and 5 pounds of beef.
c. 10 bushels of wheat and 6 pounds of beef.
d. 6 bushels of wheat and 5 pounds of beef.
60. Refer to Table 3–20. At which of the following prices would both Brad and Theresa gain from
trade with each other?
a. 12 bushels of wheat for 6 pounds of beef
b. 12 bushels of wheat for 8 pounds of beef
c. 12 bushels of wheat for 12 pounds of beef
d. Brad and Theresa could not both gain from trade with each other at any price.
Interdependence and the Gains from Trade 589
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.
Output Produced in
One Day
Coolers
Radios
Jamaica
12
6
Norway
24
3
61. Refer to Table 3-21. Jamaica’s opportunity cost of one cooler is
a. 0.5 radios, and Norway’s opportunity cost of one cooler is 0.125 radios.
b. 0.5 radios, and Norway’s opportunity cost of one cooler is 8 radios.
c. 2 radios, and Norway’s opportunity cost of one cooler is 0.125 radios.
d. 2 radios, and Norway’s opportunity cost of one cooler is 8 radios.
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?
a. 3 coolers
b. 6 coolers
c. 12 coolers
d. 24 coolers
590 Interdependence and the Gains from Trade
63. Refer to Table 3-21. Jamaica has an absolute advantage in the production of
a. coolers and Norway has an absolute advantage in the production of radios.
b. radios and Norway has an absolute advantage in the production of coolers.
c. both goods and Norway has an absolute advantage in the production of neither good.
d. neither good and Norway has an absolute advantage in the production of both goods.
64. Refer to Table 3-21. Jamaica has a comparative advantage in the production of
a. coolers and Norway has a comparative advantage in the production of radios.
b. radios and Norway has a comparative advantage in the production of coolers.
c. both goods and Norway has a comparative advantage in the production of neither good.
d. neither good and Norway has a comparative advantage in the production of both goods.
Interdependence and the Gains from Trade 591
65. Refer to Table 3-21. Jamaica should specialize in the production of
a. coolers and Norway should specialize in the production of radios.
b. radios and Norway should specialize in the production of coolers.
c. both goods and Norway should specialize in the production of neither good.
d. neither good and Norway should specialize in the production of both goods.
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
a. 12.
b. 24.
c. 36.
d. 48.
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
a. 3.
b. 6.
c. 9.
d. 12.
68. Refer to Table 3-21. At which of the following prices would both Jamaica and Norway gain
from trade with each other?
a. 1 radio for 1 cooler
b. 1 radio for 4 coolers
c. 1 radio for 10 coolers
d. Jamaica and Norway would both gain from trade at all of the above prices.
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
a. 0 coolers.
b. 1 cooler.
c. 2 coolers.
d. Jamaica and Norway can always gain from trade regardless of their opportunity costs.
70. Refer to Table 3–22. Zimbabwe’s opportunity cost of one hairbrush is
a. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush.
b. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 6/5 toothbrushes.
c. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush.
d. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 6/5 toothbrushes.
594 Interdependence and the Gains from Trade
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?
a. 0.3 hairbrush
b. 3 hairbrushes
c. 30 hairbrushes
d. 100 hairbrushes
72. Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of
a. toothbrushes and a comparative advantage in the production of toothbrushes.
b. toothbrushes and a comparative advantage in the production of hairbrushes.
c. hairbrushes and a comparative advantage in the production of toothbrushes.
d. hairbrushes and a comparative advantage in the production of hairbrushes.
Interdependence and the Gains from Trade 595
73. Refer to Table 3-22. Portugal has an absolute advantage in the production of
a. toothbrushes and a comparative advantage in the production of toothbrushes.
b. toothbrushes and a comparative advantage in the production of hairbrushes.
c. hairbrushes and a comparative advantage in the production of toothbrushes.
d. hairbrushes and a comparative advantage in the production of hairbrushes.
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
a. 4 toothbrushes and 2 hairbrushes.
b. 10 toothbrushes and 5 hairbrushes.
c. 16 toothbrushes and 8 hairbrushes.
d. 20 toothbrushes and 10 hairbrushes.
596 Interdependence and the Gains from Trade
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
a. 0 hairbrushes.
b. 5/6 hairbrushes.
c. 6/5 hairbrushes.
d. Zimbabwe and Portugal can always gain from trade regardless of their opportunity costs.
Table 3-23
Assume that the farmer and the rancher can switch between producing pork and producing
tomatoes at a constant rate.
Labor Hours Needed
to Make 1 Pound of
Pounds Produced
in 24 Hours
Pork
Tomatoes
Pork
Tomatoes
Farmer
6
3
4
8
Rancher
4
4
6
6
76. Refer to Table 3-23. The opportunity cost of 1 pound of pork for the farmer is
a. 1/2 pound of tomatoes.
b. 1/2 hour of labor.
c. 2 pounds of tomatoes.
d. 2 hours of labor.
Interdependence and the Gains from Trade 597
77. Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is
a. 1 pound of tomatoes.
b. 1 hour of labor.
c. 1.5 pounds of tomatoes.
d. 1.5 hours of labor.
78. Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the farmer is
a. 1/2 pound of pork.
b. 2 hours of labor.
c. 2 pounds of pork.
d. 4 hours of labor.
598 Interdependence and the Gains from Trade
79. Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the rancher is
a. 1 pound of pork.
b. 1 hour of labor.
c. 1.5 pounds of pork.
d. 1.5 hours of labor.
80. Refer to Table 3–23. The farmer has an absolute advantage in the production of
a. pork.
b. tomatoes.
c. both goods.
d. neither good.
Interdependence and the Gains from Trade 599
81. Refer to Table 3-23. The rancher has an absolute advantage in the production of
a. pork.
b. tomatoes.
c. both goods.
d. neither good.
82. Refer to Table 3-23. The farmer has a comparative advantage in the production of
a. pork.
b. tomatoes.
c. both goods.
d. neither good.
600 Interdependence and the Gains from Trade
83. Refer to Table 3-23. The rancher has a comparative advantage in the production of
a. pork.
b. tomatoes.
c. both goods.
d. neither good.
84. Refer to Table 3-23. The farmer should specialize in the production of
a. pork and the rancher should specialize in the production of tomatoes.
b. tomatoes and the rancher should specialize in the production of pork.
c. both goods and the rancher should specialize in the production of neither good.
d. neither good and the rancher should specialize in the production of both goods.
Interdependence and the Gains from Trade 601
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
a. 4 pounds of pork and 6 pounds of tomatoes.
b. 6 pounds of pork and 8 pounds of tomatoes.
c. 4 pounds of pork and 8 pounds of tomatoes.
d. 6 pounds of pork and 6 pounds of tomatoes.
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
a. the farmer and the rancher will both gain from this trade.
b. the farmer will gain from this trade, but the rancher will not.
c. the rancher will gain from this trade, but the farmer will not.
d. neither the farmer nor the rancher will gain from this trade.
602 Interdependence and the Gains from Trade
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,
a. the farmer gained 3 hours worth of production and the rancher gained 4 hours worth of
production.
b. the farmer gained 4 hours worth of production and the rancher gained 6 hours worth of
production.
c. the farmer gained 6 hours worth of production and the rancher gained 8 hours worth of
production.
d. the farmer gained 8 hours worth of production and the rancher gained 10 hours worth of
production.
Table 3-24
Assume that England and Spain can switch between producing cheese and producing bread at a
constant rate.
Labor Hours Needed
to Make 1 Unit of
Number of Units
Produced in 40 Hours
Cheese
Bread
Cheese
Bread
England
1
4
40
10
Spain
4
8
10
5
Interdependence and the Gains from Trade 603
88. Refer to Table 3-24. The opportunity cost of 1 unit of cheese for England is
a. 1/4 unit of bread.
b. 1 hour of labor.
c. 4 units of bread.
d. 4 hours of labor.
89. Refer to Table 3-24. The opportunity cost of 1 unit of cheese for Spain is
a. 1/2 unit of bread.
b. 2 hours of labor.
c. 2 units of bread.
d. 4 hours of labor.
604 Interdependence and the Gains from Trade
90. Refer to Table 3-24. The opportunity cost of 1 unit of bread for England is
a. 1/4 unit of cheese.
b. 1/4 hour of labor.
c. 4 units of cheese.
d. 4 hours of labor.
91. Refer to Table 3-24. The opportunity cost of 1 unit of bread for Spain is
a. 1/2 unit of cheese.
b. 1/2 hour of labor.
c. 2 units of cheese.
d. 8 hours of labor.
Interdependence and the Gains from Trade 605
92. Refer to Table 3-24. England has an absolute advantage in the production of
a. cheese and Spain has an absolute advantage in the production of bread.
b. bread and Spain has an absolute advantage in the production of cheese.
c. both goods and Spain has an absolute advantage in the production of neither good.
d. neither good and Spain has an absolute advantage in the production of both goods.
93. Refer to Table 3-24. England has a comparative advantage in the production of
a. cheese and Spain has a comparative advantage in the production of bread.
b. bread and Spain has a comparative advantage in the production of cheese.
c. both goods and Spain has a comparative advantage in the production of neither good.
d. neither good and Spain has a comparative advantage in the production of both goods.
606 Interdependence and the Gains from Trade
94. Refer to Table 3-24. England should specialize in the production of
a. cheese and Spain should specialize in the production of bread.
b. bread and Spain should specialize in the production of cheese.
c. both goods and Spain should specialize in the production of neither good.
d. neither good and Spain should specialize in the production of both goods.
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
a. 15.
b. 20.
c. 25.
d. 40.