Chapter 3 Practice: Interdependence and Gains from Trade

Question 1 of 16

1

In an hour, David can wash 2 cars or mow 1 lawn, while Ron can wash 3 cars or mow 1 lawn. Who has the absolute advantage in car washing, and who has the absolute advantage in lawn mowing?

Select one of the following:

David in washing, Ron in mowing.
Ron in washing, David in mowing.
David in washing, neither in mowing.
Ron in washing, neither in mowing.

Explanation

Question 2 of 16

1

in an hour, David can wash 2 cars or mow 1 lawn, while Ron can wash 3 cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?

Select one of the following:

David in washing, Ron in mowing
Ron in washing, David in mowing
David in washing, neither in mowing.
Ron in washing, neither in mowing.

Explanation

Question 3 of 16

1

When two individuals produce efficiently and then make a mutually beneficial trade based on comparative advantage,

Select one of the following:

they both obtain consumption outside their production possibilities frontier.
they both obtain consumption inside their production possibilities frontier.
one individual consumes inside his production possibilities frontier, while the other consumes outside his.
each individual consumes a point on his own production possibilities frontier.

Explanation

Question 4 of 16

1

Which goods will a nation typically import?

Select one of the following:

those goods in which the nation has an absolute advantage
those goods in which the nation has a comparative advantage
those goods in which other nations have an absolute advantage
those goods in which other nations have a comparative advantage

Explanation

Question 5 of 16

1

Suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor, while producing a shirt takes 4 hours of labor.
What will these nations trade?

Select one of the following:

China will export aircraft, while the United States will export shirts.
China will export shirts, while the United States will export aircraft.
Both nations will export shirts.
There are no gains from trade in this situation.

Explanation

Question 6 of 16

1

Mark can cook dinner in 30 minutes and wash the laundry in 20 minutes. His roommate takes half as long to do each task. How should the roommates allocate the work?

Select one of the following:

Mark should do more of the cooking based on his comparative advantage
Mark should do more of the washing based on his comparative advantage.
Mark should do more of the washing based on his absolute advantage.
There are no gains from trade in this situation.

Explanation

Question 7 of 16

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?

Select one of the following:

(300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)
(200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars)
(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)
(300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)

Explanation

Question 8 of 16

1

Indonesia's opportunity cost of producing bananas is...

Select one of the following:

2.5 units of rice. This is lower than India's opportunity cost of producing bananas.
2.5 units of rice. This is higher than India's opportunity cost of producing bananas.
2/5 units of rice. This is lower than India's opportunity cost of producing bananas.
2/5 units of rice. This is higher than India's opportunity cost of producing bananas.

Explanation

Question 9 of 16

1

India's opportunity cost of producing rice is

Select one of the following:

2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.
2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice.
1/2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.
1/2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice.

Explanation

Question 10 of 16

1

When can two countries gain from trading two goods?

Select one of the following:

when the first country can only produce the first good and the second country can only produce the second good
when the first country is better at producing both goods and the second country is worse at producing both goods
when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost
Two countries could gain from trading two goods under all of the above conditions

Explanation

Question 11 of 16

1

for which good(s) does Indonesia have a comparative advantage

Select one of the following:

rice but not bananas.
rice and bananas.
nether rice nor bananas.
bananas but not rice.

Explanation

Question 12 of 16

1

At which of the following prices, if any, can India and Indonesia both gain from trade?

Select one of the following:

1/3 units of bananas per unit of rice
1/5 units of bananas per unit of rice.
3/5 units of bananas per unit of rice
none of the above.

Explanation

Question 13 of 16

1

The opportunity cost of an item is

Select one of the following:

always less than the dollar value of the item.
the number of hours that one must work in order to buy one unit of the item.
what you give up to get that item.
always greater than the cost of producing the item.

Explanation

Question 14 of 16

1

Bob has...

Select one of the following:

an absolute and comparative advantage producing good x.
a comparative but not an absolute advantage producing good x.
neither a comparative nor an absolute advantage producing good x.
an absolute but not a comparative advantage producing good x.

Explanation

Question 15 of 16

1

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,

Select one of the following:

has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
should be the only producer of that good.
has a comparative advantage in the production of that good.
has an absolute advantage in the production of that good.

Explanation

Question 16 of 16

1

If the production possibilities frontier is a straight line, then "?" must be

Select one of the following:

200
400
500
300

	Created by mfloyd6 over 9 years ago

Chapter 3

Chapter 3 Practice: Interdependence and Gains from Trade

Question 1 of 16

In an hour, David can wash 2 cars or mow 1 lawn, while Ron can wash 3 cars or mow 1 lawn. Who has the absolute advantage in car washing, and who has the absolute advantage in lawn mowing?

Select one of the following:

Explanation

Question 2 of 16

in an hour, David can wash 2 cars or mow 1 lawn, while Ron can wash 3 cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?

Select one of the following:

Explanation

Question 3 of 16

When two individuals produce efficiently and then make a mutually beneficial trade based on comparative advantage,

Select one of the following:

Explanation

Question 4 of 16

Which goods will a nation typically import?

Select one of the following:

Explanation

Question 5 of 16

Suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor, while producing a shirt takes 4 hours of labor. What will these nations trade?

Select one of the following:

Explanation

Question 6 of 16

Mark can cook dinner in 30 minutes and wash the laundry in 20 minutes. His roommate takes half as long to do each task. How should the roommates allocate the work?

Select one of the following:

Explanation

Question 7 of 16

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?

Select one of the following:

Explanation

Question 8 of 16

Indonesia's opportunity cost of producing bananas is...

Select one of the following:

Explanation

Question 9 of 16

India's opportunity cost of producing rice is

Select one of the following:

Explanation

Question 10 of 16

When can two countries gain from trading two goods?

Select one of the following:

Explanation

Question 11 of 16

for which good(s) does Indonesia have a comparative advantage

Select one of the following:

Explanation

Question 12 of 16

At which of the following prices, if any, can India and Indonesia both gain from trade?

Select one of the following:

Explanation

Question 13 of 16

The opportunity cost of an item is

Select one of the following:

Explanation

Question 14 of 16

Bob has...

Select one of the following:

Explanation

Question 15 of 16

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,

Select one of the following:

Explanation

Question 16 of 16

If the production possibilities frontier is a straight line, then "?" must be

Select one of the following:

Explanation

Suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor, while producing a shirt takes 4 hours of labor.
What will these nations trade?