Question

12. Both Kenya and Japan are at a point which happens to be on their production possibilities frontiers (PPFs) for cars and computers, but Kenya produces four times the output of cars and computers as compared to Japan. It follows that

Group of answer choices

c. Kenya has a bigger population than Japan.

a. Kenya's PPF lies further to the right than country 2's PPF.

b. Kenya has a smaller population than Japan.

d. Kenya is efficient and Japan is inefficient. e. none of the above

13. In an eight-hour day, Randall can produce either 21 loaves of banana bread or 7 pounds of peanut brittle. In an eight-hour day, Kate can produce either 12 loaves of bread or 12 pounds of peanut brittle. The opportunity cost of producing 1 pound of peanut brittle is

Group of answer choices

c. 3 loaves of banana bread for Randall and 1 loaf of banana bread for Kate.

b. 1 hour for Randall and 1 hour for Kate.

d. 1/3 loaves of banana bread for Randall and 1 loaf of banana bread for Kate.

a. 1/3 hour for Randall and 1 hour for Kate.

16. France and Spain each produce two goods: Brie and Sangria. For France, their production possibilities schedule is as follows: 300 Brie and 0 Sangria, 200 Brie and 10 Sangria, 100 Brie and 20 Sangria, and 0 Brie and 30 Sangria. For Spain, they can produce the following combinations: 60 Brie and 0 Sangria, 40 Brie and 30 Sangria, 20 Brie and 60 Sangria, and 0 Brie and 90 Sangria. For Spain, the opportunity cost of producing one unit of Brie is __________ unit(s) of Sangria.

Group of answer choices

c. ½

a. 1.5

b. 2

d. 2/3

17. France and Spain each produce two goods: Brie and Sangria. For France, their production possibilities schedule is as follows: 300 Brie and 0 Sangria, 200 Brie and 10 Sangria, 100 Brie and 20 Sangria, and 0 Brie and 30 Sangria. For Spain, they can produce the following combinations: 60 Brie and 0 Sangria, 40 Brie and 30 Sangria, 20 Brie and 60 Sangria, and 0 Brie and 90 Sangria. In the no specialization-no trade case (the before point), suppose France produces 100 units of Brie and 20 units of Sangria. Spain produces and consumes 20 units of Brie and 60 units of Sangria as the before point. If the two countries specialize and trade, and the actual amounts traded are 125 units of Brie for 25 units of Sangria, how many more units of Brie will France consume by specializing and trading?

Group of answer choices

b. 25

c. 15

d. 105

a. 75

18. France and Spain each produce two goods: Brie and Sangria. For France, their production possibilities schedule is as follows: 300 Brie and 0 Sangria, 200 Brie and 10 Sangria, 100 Brie and 20 Sangria, and 0 Brie and 30 Sangria. For Spain, they can produce the following combinations: 60 Brie and 0 Sangria, 40 Brie and 30 Sangria, 20 Brie and 60 Sangria, and 0 Brie and 90 Sangria. In the no specialization-no trade case, suppose France produces and consumes 100 units of Brie and 20 units of Sangria (the before point). Spain produces and consumes 20 units of Brie and 60 units of Sangria. If the two countries specialize and trade, and the actual amounts traded are 125 units of Brie for 25 units of Sangria, how many more units of Sangria will Spain consume by specializing and trading?

Group of answer choices

c. 15

b. 5

a. 75

d. 10

Answer 1

1. a. Kenya's PPF lies further to the right than country 2's PPF.

Both Kenya and Japan are producing on their PPFs, this implies that both are producing efficiently. Population as a factor is itself adjust in the coordinates of PPF. Thus Kenya's PPF must lie further to the right for it to produce 4 times more.

2. c. 3 loaves of banana bread for Randall and 1 loaf of banana bread for Kate.

Randall:

21 loaves of banana bread = 7 pounds of peanut butter

Using unitary method, 21/7 loaves of banana bread = 1 pound of peanut butter

That is. 3 loaves of banana bread = 1 pound of peanut butter

Kate:

12 loaves of banana bread = 12 pounds of peanut butter

Using unitary method, 12/12 loaves of banana bread = 1 pound of peanut butter

That is. 1 loave of banana bread = 1 pound of peanut butter

3. a. 1.5

For Spain, they can produce the following combinations: 60 Brie and 0 Sangria, 40 Brie and 30 Sangria, 20 Brie and 60 Sangria, and 0 Brie and 90 Sangria. That is, producing every 20 Brie, Spain has to forego 30 Sangria. Using unitary method, the opportunity cost of 1 Brie = 30/20 Sangria. That is, 1 Brie = 1.5 Sangria.

4. a. 75

France can produce either 300 Brie or 30 Sangria. Spain can produce either 60 Brie or 90 Sangria. Thus France has comparative advantage in producing Brie and Spain has comparative advantage in producing Sangria.

If France specializes and produces 300 Brie, it will consume 300 Brie produced - 125 Brie traded = 175 Brie. In the no specialization-no trade case (the before point), France produced 100 units of Brie. Thus it is consuming 175-100= 75 more Brie.

5. b. 5

France can produce either 300 Brie or 30 Sangria. Spain can produce either 60 Brie or 90 Sangria. Thus France has comparative advantage in producing Brie and Spain has comparative advantage in producing Sangria.

If Spain specializes and produces 90 Sangria, it will consume 90 Sangria produced - 25 Sangria traded = 65 Sangria. In the no specialization-no trade case (the before point), Spain produced 60 units of Sangria. Thus it is consuming 65-60= 5 more Sangria.