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Exam 2: Specializationand Exchange

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Question 61

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Choosing to produce at any point within (inside, not on) a production possibilities frontier is:

A) inefficient, meaning the society would not be using all its available resources in their best possible uses.
B) efficient, meaning the society would be using all its available resources in their best possible uses.
C) unobtainable, meaning the society cannot produce that combination of goods.
D) efficient, but not attainable.

E) A) and B)
F) All of the above

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Question 62

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Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country B will benefit from trade if the country specializes in _____ because _____

A) bananas; it has a comparative advantage at producing bananas.
B) tomatoes; its opportunity cost of tomatoes is higher than that of Country A.
C) tomatoes; its opportunity cost of tomatoes is lower than that of Country A.
D) bananas; it has an absolute advantage at producing bananas.

E) None of the above
F) A) and B)

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Question 63

Multiple Choice

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When nations trade:

Consider the production possibilities frontier displayed in the figure shown. A society faced with this curve currently:

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. In one day, Tom can produce either:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is _____ for the United States than Canada, so Canada has a(n) _____ advantage at producing shoes.

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. In one day, Jerry can produce:

Economic theory states that losing a comparative advantage at producing one good means creating a comparative advantage at producing another. As an economy transitions from producing one good to producing another good:

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is a bundle of goods that Country B could potentially make?

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. After looking at the production possibilities for both Tom and Jerry, what can we conclude?

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. What terms of trade would both countries be willing to agree to?

What limits the terms of trade that a country would find acceptable?

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

Why do people often choose to specialize and trade?

A production possibilities frontier is a line or curve that:

Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The slope of Country A's production possibilities frontier:

The slope of a production possibilities frontier measures:

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is a bundle of goods that Country B could not make?

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. Because Tom has a _____ opportunity cost for one table compared to Jerry, we know Tom has _____.