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3. q 1 clancy and eileen are farmers each one owns...

# Question: q 1 clancy and eileen are farmers each one owns...

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Q 1: Clancy and Eileen are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest.

Corn

Rye

(Bushels per acre)

(Bushels per acre)

Clancy 20 5
Eileen 50 10

On the following graph, use the blue line (circle symbol) to plot Clancy's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Eileen's PPF.

has an absolute advantage in the production of corn, and   has an absolute advantage in the production of rye.

Clancy's opportunity cost of producing 1 bushel of rye is

bushels of corn, whereas Eileen's opportunity cost of producing 1 bushel of rye is

bushels of corn. Because Clancy has a   opportunity cost of producing rye than Eileen,   has a comparative advantage in the production of rye, and   has a comparative advantage in the production of corn.

Q2:

Suppose that Italy and Austria both produce beer and cheese. Italy's opportunity cost of producing a pound of cheese is 3 barrels of beer while Austria's opportunity cost of producing a pound of cheese is 11 barrels of beer.

By comparing the opportunity cost of producing cheese in the two countries, you can tell that   has a comparative advantage in the production of cheese and   has a comparative advantage in the production of beer.

Suppose that Italy and Austria consider trading cheese and beer with each other. Italy can gain from specialization and trade as long as it receives more than   of beer for each pound of cheese it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than   of cheese for each barrel of beer it exports to Italy.

Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of beer) would allow both Austria and Italy to gain from trade? Check all that apply.

1 barrel of beer per pound of cheese

2 barrels of beer per pound of cheese

7 barrels of beer per pound of cheese

18 barrels of beer per pound of cheese

 Question 1 Susan can brew 5 gallons of root beer in an hour or she can make 4 pizzas in an hour. Becky can brew 7 gallons of root beer in an hour or she can make 5 pizzas in an hour. Susan's opportunity cost of making a pizza is gallons of root beer. Becky's opportunity cost of making a pizza is gallons of root beer. Enter numbers rounded to two decimal places.
 Question 2 Bill and Fred bake cakes and pies. Bill's opportunity cost of baking 1 pie is 3 cakes. Fred's opportunity cost of baking 1 pie is 5 cakes. Who should bake the pie? Bill Fred

Question 3

For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs.

True False

 Question 4 If the resources used to produce two goods are specialized, then the production possibilities frontier has a bowed­out shape. True False

Question 5

Two countries produce two goods and they each have 4 million hours of labor. Consider the table that shows the quantity produced per labor hour:

If each country specializes in the good for which it has a comparative advantage then in total the two countries can together produce million shirts and

million bushels of corn. Enter whole numbers.

 Shirts Corn (bushels) Alpha 4 12 Beta 2 10

Question 6

Consider the production possibilities frontier for a country that produces cars and wheat:

The graph shows that cars produce is 14 million and 350 million bushels of wheat.

In the absence of trade, if this country chooses to produce 6 million cars then they will also be able to produce million bushels of wheat. Enter a whole number.
Suppose the country specializes in wheat production and trades 100 million bushels of wheat in exchange for 8 million cars. They will be able to consume

million bushels of wheat. Enter a whole number.

Question 7

Two countries produce two goods and they each have 4 million hours of labor. Consider the table that shows the quantity produced per labor hour:

If each country allocates 2 million hours of labor to each good then in total the two countries can together produce million shirts and
million bushels of corn. Enter whole numbers.

 Shirts Corn (bushels) Alpha 4 12 Beta 2 10

Question 8

A country should specialize in producing the goods for which it has the highest opportunity cost.

True False

 Question 9 4 pts If a country has a comparative advantage in producing fish, then they must also have an absolute advantage in producing fish. True False
 Question 10 If there are constant opportunity costs of production then the production possibilities frontier is a straight line. True False

Question 11

If John can produce a good in less time than Fred then he has an absolute advantage in producing that good.

True

False

 Question 12 Latasha can read 30 pages of economics in an hour. She can also read 20 pages of sociology in an hour. She spends 4 hours per day studying. Her opportunity cost of reading 30 pages of sociology is pages of economics. Her opportunity cost of reading 15 pages of economics is pages of sociology. Enter whole numbers.
 Question 13 Suppose that in a week an American worker can produce 60 shirts or 3 computers and a Chinese worker can produce 60 shirts or 1 computers. The country that specializes in computers will trade 1 computer in exchange for at least shirts. The country that buys the computer will pay not more than shirts. Enter whole numbers.

Question 14

Consider the following production possibilities table that shows different combinations of two goods that can be produced with given resources:

Shirts

Corn

A . 0 20

B . 10   15

C . 20   10

D . 30    5

E . 40 0

Based on the table, which is true?

Opportunity cost is constant

Opportunity cost is increasing

 Question 15 A country can produce either 25 pounds of fish or 7 bushels of corn. What is the opportunity cost of producing one bushel of corn? Enter a number rounded to two decimal places.
 Question 16 England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 30 scones per hour or 2 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 4 sweaters per hour. Who will produce sweaters? Scotland England

Question 17

Susan can brew 5 gallons of root beer in an hour or she can make 4 pizzas in an hour. Becky can brew 7 gallons of root beer in an hour or she can make 5 pizzas in an hour. Who has an absolute advantage in making pizza?

Susan

Becky

 Question 18 Bill and Fred bake cakes and pies. Bill's opportunity cost of baking 1 pie is 3 cakes. Fred's opportunity cost of baking 1 pie is 5 cakes. If both parties are to benefit from trade then we can expect 1 pie to sell for: 4 cakes 2 cakes 6 cakes
 Question 19 A country decides to specialize in wheat production. They now export wheat and import shirts. Which groups of people in this country benefit from trade? Check all that are correct. wheat consumers wheat producers shirt consumers shirt producers
 Question 20 When countries specialize in producing certain goods and then freely exchange those goods for other goods with different countries, what is the advantage? Each country can consume at a point outside their production possibilities frontier. All people in each country will be better off than they would be if they did not trade. Each country can produce and consume at a point outside their production possibilities frontier. Each country can produce at a point outside their production possibilities frontier.
 Question 21 Susan can brew 5 gallons of root beer in an hour or she can make 4 pizzas in an hour. Becky can brew 7 gallons of root beer in an hour or she can make 5 pizzas in an hour. Who has a comparative advantage in making root beer? Becky Susan
 Question 22 Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. True False

Question 24

Consider the following production possibilities table that shows different combinations of two goods that can be produced with given resources:

 Shirts Corn A 0 20 B 10 15 C 20 10 D 30 5 E 40 0

When the country moves from point A to point B, the opportunity cost of producing 1 shirt is bushels of corn.

When the country moves from point C to point D, the opportunity cost of producing 1 shirt is bushels of corn.

Enter numbers rounded to two decimals as necessary.

Question 23

If trade is beneficial for a country, it must be good for everyone in the country.

True False

Question 25

A country that has an absolute advantage in producing corn does not necessarily have a comparative advantage in producing corn.

True False