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Chapter 3 Interdependence and the Gains from Trade TRUE/FALSE 1. In most countries today, many goods and services consumed are imported from abroad, and many goods and services produced are exported to foreign customers. ANS: T DIF: 1 REF: 3-0 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Trade MSC: Definitional 2. Interdependence among individuals and interdependence among nations are both based on the gains from trade. ANS: T DIF: 2 REF: 3-0 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Interpretive 3. If a person chooses self-sufficiency, then she can only consume what she produces. ANS: T DIF: 1 REF: 3-1 NAT: Analytic LOC: The study of economics and definitions of economics TOP: Self-sufficiency MSC: Definitional 4. If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine. ANS: F DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative 5. It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours to produce every good than it takes German workers. ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Gains from trade MSC: Applicative 6. A production possibilities frontier is a graph that shows the combination of outputs that an economy should produce. ANS: F DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive 7. Production possibilities frontiers cannot be used to illustrate tradeoffs. ANS: F DIF: 1 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Definitional 8. An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce at points outside its production possibilities frontier. ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier MSC: Interpretive 9. Trade allows a country to consume outside its production possibilities frontier. ANS: T DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production possibilities frontier | Trade MSC: Interpretive 10. Opportunity cost refers to how many inputs a producer requires to produce a good. ANS: F DIF: 1 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost MSC: Definitional 128 129 Chapter 3 /Interdependence and the Gains from Trade 11. Opportunity cost measures the trade-off between two goods that each producer faces.... View Full Document

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