Chapter 3 (practice questions)

Chapter 3 (practice questions) - Chapter 3Interdependence...

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Chapter 3—Interdependence and the Gains from Trade 1. Without trade a. a country is better off because it will become self-sufficient. b. a country's production possibilities frontier is also its consumption possibilities frontier. c. a country can still benefit from international specialization. d. more product variety is available in a country. Table 3-1 Labor Hours Needed to Make 1 Pound of: Pounds produced in 40 hours: Meat Potatoes Meat Potatoes Farmer 8 2 5 20 Rancher 4 5 10 8 2. Refer to Table 3-1 . The opportunity cost of 1 pound of meat for the farmer is a. 1/4 hour of labour. b. 4 hours of labour. c. 4 pounds of potatoes. d. 1/4 pound of potatoes. 3. Refer to Table 3-1 . The opportunity cost of 1 pound of potatoes for the rancher is a. 4 hours of labour. b. 5 hours of labour. c. 5/4 pounds of meat. d. 4/5 pound of meat. 4. Refer to Table 3-1 . The Farmer has an absolute advantage in a. meat, and the Rancher has an absolute advantage in potatoes. b. potatoes, and the Rancher has an absolute advantage in meat. c. meat, and the Rancher has an absolute advantage in meat. d. neither good, and the Rancher has an absolute advantage in both goods. 5. Refer to Table 3-1 . The Rancher has a comparative advantage in a. neither good, and the Farmer has a comparative advantage in both goods. b. both goods, and the Farmer has a comparative advantage in neither good. c. meat, and the Farmer has a comparative advantage in potatoes. d. potatoes, and the Farmer has a comparative advantage in meat. 6. Refer to Table 3-1 . The Farmer and Rancher both could benefit by the Farmer specializing in a. meat and the Rancher specializing in potatoes. b. potatoes and the Rancher specializing in meat. c. neither good and the Rancher specializing in both goods. d. They cannot benefit by specialization and trade.
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Figure 3-1 7. Refer to Figure 3-1 . If Paul divides his time equally between corn and wheat, he will be able to produce a. 2 bushels of wheat and 2 bushels of corn. b.
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This note was uploaded on 01/07/2010 for the course ECO eco1104 taught by Professor Davidgray during the Fall '09 term at University of Ottawa.

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Chapter 3 (practice questions) - Chapter 3Interdependence...

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