Table 3-3 Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. Zimbabwe Portugal Machine Minutes Needed to Make 1 Toothbrush Hairbrush 3 10 5 6 27. Refer to Table 3-3. Which of the following represents Zimbabwe’s and Portugal’s production possibilities frontiers when each country has 60 minutes of machine time available? Zimbabwe a. Portugal 10 Hairbrushes 8 6 10 4 8 2 6 Hairbrushes 4 1 2 3 4 5 Toothbrushes 2 1 b. Zimbabwe 2 3 4 5 Toothbrushes Portugal 5 Hairbrushes 5 Hairbrushes 4 4 3 3 2 2 1 1 2 4 6 8 10 2 4 Toothbrushes c. Zimbabwe 500 360 400 288 300 216 200 144 100 72 72 108 144 180 Hairbrushes 100 200 300 400 500 Toothbrushes Zimbabwe 10 Hairbrushes ANS: D Toothbrushes Portugal 10 8 8 6 6 4 4 2 2 5 10 15 20 25 Toothbrushes 10 Portugal 432 d. 8 Toothbrushes 600 Hairbrushes 36 6 Hairbrushes 2 4 6 8 10 Toothbrushes 28. Refer to Table 3-3. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is a. b. c. d. 24 toothbrushes and 12 hairbrushes. 48 toothbrushes and 24 hairbrushes. 96 toothbrushes and 48 hairbrushes. 720 toothbrushes and 1440 hairbrushes. ANS: B 29. Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Portugal produce in 30 minutes? a. b. c. d. 1 toothbrush and 4 hairbrushes 4 toothbrushes and 2 hairbrushes 5 toothbrushes and 6 hairbrushes 6 toothbrushes and 5 hairbrushes ANS: A 30. Refer to Table 3-3. Which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes? a. b. c. d. 5 toothbrushes and 11 hairbrushes 10 toothbrushes and 9 hairbrushes 20 toothbrushes and 6 hairbrushes 30 toothbrushes and 3 hairbrushes ANS: A 31. Refer to Table 3-3. Zimbabwe’s opportunity cost of one hairbrush is a. b. c. d. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 6/5 toothbrushes. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 6/5 toothbrushes. ANS: D 32. Refer to Table 3-3. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision? a. b. c. d. 0.3 hairbrush 3 hairbrushes 30 hairbrushes 100 hairbrushes ANS: B 33. Refer to Table 3-3. Zimbabwe has an absolute advantage in the production of a. b. c. d. ANS: A toothbrushes and a comparative advantage in the production of toothbrushes. toothbrushes and a comparative advantage in the production of hairbrushes. hairbrushes and a comparative advantage in the production of toothbrushes. hairbrushes and a comparative advantage in the production of hairbrushes. 34. Refer to Table 3-3. Portugal has an absolute advantage in the production of a. b. c. d. toothbrushes and a comparative advantage in the production of toothbrushes. toothbrushes and a comparative advantage in the production of hairbrushes. hairbrushes and a comparative advantage in the production of toothbrushes. hairbrushes and a comparative advantage in the production of hairbrushes. ANS: D 35. Refer to Table 3-3. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by a. b. c. d. 4 toothbrushes and 2 hairbrushes. 10 toothbrushes and 5 hairbrushes. 16 toothbrushes and 8 hairbrushes. 20 toothbrushes and 10 hairbrushes. ANS: A 36. Refer to Table 3-3. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to a. b. c. d. 0 coolers. 5/6 cooler. 6/5 coolers. Zimbabwe and Portugal can always gain from trade regardless of their opportunity costs. ANS: B Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Farmer Rancher Labor Hours Needed to Make 1 Pound of Meat Potatoes 10 2 4 8 Pounds Produced in 40 Hours Meat Potatoes 4 20 10 5 37. Refer to Table 3-4. Assume that the farmer and the rancher each has 40 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is a. b. c. d. ANS: B 5 pounds of meat and 10 pounds of potatoes. 7 pounds of meat and 12.5 pounds of potatoes. 10 pounds of meat and 20 pounds of potatoes. 14 pounds of meat and 25 pounds of potatoes. 38. Refer to Table 3-4. Which of the following combinations of meat and potatoes could the farmer produce in 40 hours? a. b. c. d. 1 pound of meat and 15 pounds of potatoes. 2 pounds of meat and 11 pounds of potatoes. 3 pounds of meat and 6 pounds of potatoes. 4 pounds of meat and 20 pounds of potatoes. ANS: A 39. Refer to Table 3-4. Which of the following combinations of meat and potatoes could the rancher not produce in 40 hours? a. b. c. d. 2.5 pounds of meat and 3.75 pounds of potatoes. 5 pounds of meat and 2.5 pounds of potatoes. 7.5 pounds of meat and 1.25 pounds of potatoes. 10 pounds of meat and 0.5 pound of potatoes. ANS: D 40. Refer to Table 3-4. The opportunity cost of 1 pound of meat for the farmer is a. b. c. d. 1/5 pound of potatoes. 1/5 hour of labor. 5 pounds of potatoes. 10 hours of labor. ANS: C 41. Refer to Table 3-4. The opportunity cost of 1 pound of meat for the rancher is a. b. c. d. 1/2 pound of potatoes. 2 hours of labor. 2 pounds of potatoes. 4 hours of labor. ANS: A 42. Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the farmer is a. b. c. d. 1/5 pound of meat. 2 hours of labor. 5 pounds of meat. 5 hours of labor. ANS: A 43. Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the rancher is a. b. c. d. ANS: C 1/2 pound of meat. 1/2 hour of labor. 2 pounds of meat. 8 hours of labor. 44. Refer to Table 3-4. The farmer has an absolute advantage in the production of a. b. c. d. meat. potatoes. both goods. neither good. ANS: B 45. Refer to Table 3-4. The rancher has an absolute advantage in the production of a. b. c. d. meat. potatoes. both goods. neither good. ANS: A 46. Refer to Table 3-4. The farmer has a comparative advantage in the production of a. b. c. d. meat. potatoes. both goods. neither good. ANS: B 47. Refer to Table 3-4. The rancher has a comparative advantage in the production of a. b. c. d. meat. potatoes. both goods. neither good. ANS: A 48. Refer to Table 3-4. The farmer should specialize in the production of a. b. c. d. meat and the rancher should specialize in the production of potatoes. potatoes and the rancher should specialize in the production of meat. both goods and the rancher should specialize in the production of neither good. neither good and the rancher should specialize in the production of both goods. ANS: B 49. Refer to Table 3-4. Assume that the farmer and the rancher each has 40 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is a. b. c. d. ANS: B 4 pounds of meat and 5 pounds of potatoes. 10 pounds of meat and 20 pounds of potatoes. 14 pounds of meat and 25 pounds of potatoes. 24 pounds of meat and 15 pounds of potatoes. 50. Refer to Table 3-4. Assume that the farmer and the rancher each has 40 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 2 pounds of meat for 6 pounds of potatoes, then a. b. c. d. the farmer and the rancher will both gain from this trade. the farmer will gain from this trade, but the rancher will not. the rancher will gain from this trade, but the farmer will not. neither the farmer nor the rancher will gain from this trade. ANS: A 51. Refer to Table 3-4. Without trade, the farmer produced and consumed 3 pounds of meat and 5 pounds of potatoes and the rancher produced and consumed 4 pounds of meat and 3 pounds of potatoes. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 4 pounds of meat for 8 pounds of potatoes. As a result, the farmer gained a. b. c. d. 1 pound of meat and 3 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes. 1 pound of meat and 7 pounds of potatoes and the rancher gained 2 pounds of meat and 5 pounds of potatoes. 4 pounds of meat and 8 pounds of potatoes and the rancher gained 4 pounds of meat and 8 pounds of potatoes. 4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes. ANS: B Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. England Spain Labor Hours Needed to Make 1 Unit of Cheese Bread 1 4 4 8 Number of Units Produced in 40 Hours Cheese Bread 40 10 10 5 52. Refer to Table 3-5. Assume that England and Spain each has 40 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is a. b. c. d. 20 units of cheese and 5 units of bread. 25 units of cheese and 7.5 units of bread. 40 units of cheese and 10 units of bread. 50 units of cheese and 15 units of bread. ANS: B 53. Refer to Table 3-5. Which of the following combinations of cheese and bread could Spain produce in 40 hours? a. b. c. d. ANS: C 2.25 units of cheese and 4 units of bread. 5.5 units of cheese and 3 units of bread. 7 units of cheese and 1.5 units of bread. 10 units of cheese and 5 units of bread. 54. Refer to Table 3-5. Which of the following combinations of cheese and bread could England not produce in 40 hours? a. b. c. d. 5 units of cheese and 9 units of bread. 10 units of cheese and 7.5 units of bread. 20 units of cheese and 5 units of bread. 30 units of cheese and 2.5 units of bread. ANS: A 55. Refer to Table 3-5. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring cheese along the horizontal axis, then a. b. c. d. the slope of England’s production possibilities frontier would be -4 and the slope of Spain’s production possibilities frontier would be -2. the slope of England’s production possibilities frontier would be -0.25 and the slope of Spain’s production possibilities frontier would be -0.5. the slope of England’s production possibilities frontier would be 0.25 and the slope of Spain’s production possibilities frontier would be 0.5. the slope of England’s production possibilities frontier would be 4 and the slope of Spain’s production possibilities frontier would be 2. ANS: B 56. Refer to Table 3-5. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring bread along the horizontal axis, then a. b. c. d. the slope of England’s production possibilities frontier would be -4 and the slope of Spain’s production possibilities frontier would be -2. the slope of England’s production possibilities frontier would be -0.25 and the slope of Spain’s production possibilities frontier would be -0.5. the slope of England’s production possibilities frontier would be 0.25 and the slope of Spain’s production possibilities frontier would be 0.5. the slope of England’s production possibilities frontier would be 4 and the slope of Spain’s production possibilities frontier would be 2. ANS: A 57. Refer to Table 3-5. The opportunity cost of 1 unit of cheese for England is a. b. c. d. 1/4 unit of bread. 1 hour of labor. 4 units of bread. 4 hours of labor. ANS: A 58. Refer to Table 3-5. The opportunity cost of 1 unit of cheese for Spain is a. b. c. d. ANS: A 1/2 unit of bread. 2 hours of labor. 2 units of bread. 4 hours of labor. 59. Refer to Table 3-5. The opportunity cost of 1 unit of bread for England is a. b. c. d. 1/4 unit of cheese. 1/4 hour of labor. 4 units of cheese. 4 hours of labor. ANS: C 60. Refer to Table 3-5. The opportunity cost of 1 unit of bread for Spain is a. b. c. d. 1/2 unit of cheese. 1/2 hour of labor. 2 units of cheese. 8 hours of labor. ANS: C 61. Refer to Table 3-5. England has an absolute advantage in the production of a. b. c. d. cheese and Spain has an absolute advantage in the production of bread. bread and Spain has an absolute advantage in the production of cheese. both goods and Spain has an absolute advantage in the production of neither good. neither good and Spain has an absolute advantage in the production of both goods. ANS: C 62. Refer to Table 3-5. England has a comparative advantage in the production of a. b. c. d. cheese and Spain has a comparative advantage in the production of bread. bread and Spain has a comparative advantage in the production of cheese. both goods and Spain has a comparative advantage in the production of neither good. neither good and Spain has a comparative advantage in the production of both goods. ANS: A 63. Refer to Table 3-5. England should specialize in the production of a. b. c. d. cheese and Spain should specialize in the production of bread. bread and Spain should specialize in the production of cheese. both goods and Spain should specialize in the production of neither good. neither good and Spain should specialize in the production of both goods. ANS: A 64. Refer to Table 3-5. Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by a. b. c. d. ANS: A 15. 20. 25. 40. 65. Refer to Table 3-5. At which of the following prices would both England and Spain gain from trade with each other? a. b. c. d. 16 units of bread for 16 units of cheese 16 units of bread for 24 units of cheese 16 units of bread for 48 units of cheese England and Spain could not both gain from trade with each other at any price. ANS: C 66. Refer to Table 3-5. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume a. b. c. d. 34 units of cheese and 2 units of bread and Spain will consume 6 units of cheese and 3 units of bread. 34 units of cheese and 2 units of bread and Spain will consume 16 units of cheese and 3 units of bread. 34 units of cheese and 12 units of bread and Spain will consume 6 units of cheese and 3 units of bread. 34 units of cheese and 12 units of bread and Spain will consume 16 units of cheese and 3 units of bread. ANS: A 67. Refer to Table 3-5. Without trade, England produced and consumed 32 units of cheese and 2 units of bread and Spain produced and consumed 6 units of cheese and 2 units of bread. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 7 units of cheese for 2.5 units of bread. As a result, England gained a. b. c. d. 0 units of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread. 1 unit of cheese and 0.5 unit of bread and Spain gained 1 unit of cheese and 0.5 unit of bread. 7 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of bread. 33 units of cheese and 2.5 units of bread and Spain gained 7 units of cheese and 2.5 units of bread. ANS: B 68. Refer to Table 3-5. England should export a. b. c. d. cheese and import bread. bread and import cheese. both goods and import neither good. neither good and import both goods. ANS: A 69. Refer to Table 3-5. Spain should export a. b. c. d. ANS: B cheese and import bread. bread and import cheese. both goods and import neither good. neither good and import both goods.