Question : 11.Consider two individuals — Howard and Mai — each of : 1262263

 

11.Consider two individuals — Howard and Mai — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Howard and Mai are least obvious in which of the following cases?

a.Howardisverygoodatknittingsweatersandatcookingtastyfood,butMai’sskillsinbothoftheseactivitiesareverypoor.

b.Howardisverygoodatknittingsweatersandatcookingtastyfood;Maiisverygoodatknittingsweaters,butsheknowsnothingaboutcookingtastyfood.

c.Howard’sskillsinknittingsweatersarefairlygood,buthisskillsincookingtastyfoodarefairlybad?Mai’sskillsinknittingsweatersarefairlybad,butherskillsincookingtastyfoodarefairlygood.

d.Howard’sskillsaresuchthathecanproduceonlysweaters,andMai’sskillsaresuchthatshecanproduceonlytastyfood.

12.Aprofessorspends10hoursperdaygivinglecturesandwritingpapers.Fortheprofessor,agraphthatshowshisvariouspossiblemixesofoutput(lecturesgivenperdayandpaperswrittenperday)iscalledhis

a.lineoftastes.

b.trade-offcurve.

c.productionpossibilitiesfrontier.

d.consumptionpossibilitiesfrontier.

13.Supposethereareonlytwopeopleintheworld.Eachperson’sproductionpossibilitiesfrontieralsorepresentshisorherconsumptionpossibilitieswhen

a.neitherpersonfacestrade-offs.

b.thefrontiersarestraightlines.

c.thefrontiersarebowedout.

d.theychoosenottotradewithoneanother.

14.Themostobviousbenefitofspecializationandtradeisthattheyallowusto

a.workmorehoursperweekthanweotherwisewouldbeabletowork.

b.consumemoregoodsthanweotherwisewouldbeabletoconsume.

c.spendmoremoneyongoodsthatarebeneficialtosociety,andlessmoneyongoodsthatareharmfultosociety.

d.consumemoregoodsbyforcingpeopleinothercountriestoconsumefewergoods.

15.Asastudent,Annespends40hoursperweekwritingtermpapersandcompletinghomeworkassignments.Ononeaxisofherproductionpossibilitiesfrontierismeasuredthenumberoftermpaperswrittenperweek.Ontheotheraxisismeasuredthenumberofhomeworkassignmentscompletedperweek.Anne’sproductionpossibilitiesfrontierisastraightlineif

a.shefacesnotrade-offbetweenwritingtermpapersandcompletinghomeworkassignments.

b.shecanswitchbetweenwritingtermpapersandcompletinghomeworkassignmentsataconstantrate.

c.therateatwhichshecanswitchbetweenhomeworkassignmentsandtermpapersdependsonthenumberofhomeworkassignmentssheiscompletingandonthenumberoftermpaperssheiswriting.

d.sheisrequiredbyherprofessorstospendhalfofhertimeontermpapersandtheotherhalfofhertimeonhomeworkassignments.

16.Foraself-sufficientproducer,theproductionpossibilitiesfrontier

a.isthesameastheconsumptionpossibilitiesfrontier.

b.isgreaterthantheconsumptionpossibilitiesfrontier.

c.islessthantheconsumptionpossibilitiesfrontier.

d.isalwaysastraightline.

Table3-1

 

 

AssumethatJohnandJanecanswitchbetweenproducingbreadandwineataconstantrate.

 

 

LaborHoursNeededtoMake

BottleofWine

LoafofBread

Jane

2

1.5

John

3

1

 

17.RefertoTable3-1.AssumethatJohnandJaneeachwork24hours.Whathappenstototalproductionifinsteadofeachpersonspending12hoursproducingeachgood,Janespends21hoursproducingwineand3hoursproducingbreadandJohnspends3hoursproducingwineand21hoursproducingbread?

a.Thetotalproductionofbreadandwineeachrise.

b.Thetotalproductionofbreadrisesandthetotalproductionofwinefalls.

c.Thetotalproductionofbreadfallsandthetotalproductionofwinerises.

d.Thetotalproductionofbreadandwineeachfall.

Table3-2

 

 

AssumethatEnglandandHollandcanswitchbetweenproducingmilkandoatsataconstantrate.

 

 

NumberofUnitsProducedinanHour

Milk

Oats

England

10

4

Holland

8

6

 

18.RefertoTable3-2.WecouldusetheinformationinthetabletodrawaproductionpossibilitiesfrontierforEnglandandasecondproductionpossibilitiesfrontierforHolland.Ifweweretodothis,measuringmilkalongthehorizontalaxis,then

a.theslopeofEngland’sproductionpossibilitiesfrontierwouldbe­10/4andtheslopeofHolland’sproductionpossibilitiesfrontierwouldbe-4/3.

b.theslopeofEngland’sproductionpossibilitiesfrontierwouldbe­4/10andtheslopeofHolland’sproductionpossibilitiesfrontierwouldbe-3/4.

c.theslopeofEngland’sproductionpossibilitiesfrontierwouldbe10/4andtheslopeofHolland’sproductionpossibilitiesfrontierwouldbe4/3.

d.theslopeofEngland’sproductionpossibilitiesfrontierwouldbe4/10andtheslopeofHolland’sproductionpossibilitiesfrontierwouldbe3/4.

Table3-3

ProductionOpportunities

 

 

HoursNeededtoMake1Unitof

NumberofUnitsProducedin40Hours

 

Cheese

Wine

Cheese

Wine

England

1

4

40

10

France

5

2

8

20

 

19.RefertoTable3-3.AssumethatEnglandandFranceeachhas40laborhoursavailable.Ifeachcountrydividesitstimeequallybetweentheproductionofcheeseandwine,thentotalproductionis

a.8unitsofcheeseand10unitsofwine

b.24unitsofcheeseand15unitsofwine

c.40unitsofcheeseand20unitsofwine

d.48unitsofcheeseand30unitsofwine

20.RefertoTable3-3.WhichofthefollowingcombinationsofcheeseandwinecouldFranceproducein40hours?

a.2unitsofcheeseand20unitsofwine

b.4unitsofcheeseand15unitsofwine

c.6unitsofcheeseand5unitsofwine

d.8unitsofcheeseand20unitsofwine