Final Exam Study Material MBA 680 - Study Answer Collection

Final Exam Study Material MBA 680 - Study Answer Collection The following figure shows the production-possibility curves for Canada (AB) and the rest of the world (CD). Suppose Canada begins to trade with the rest of the world. If, in the international market, one bushel of corn is exchanged for one liter of maple syrup, Canada will produce _____ bushels of corn and the rest of the world will produce _____ liters of maple syrup. A. 35; 32.5 B. 0; 0 C. 70; 50 D. 90; 100 - answer - B. 0; 0 *Graph 1* The table below shows the number of umbrellas and bushels of corn produced in the United Kingdom and the rest of the world per labor hour. If the United Kingdom and the rest of the world begin to trade with each other, the international price of umbrellas will lie between _____ and _________. Productivity - UK - World Umbrellas/LH - 0.25 - 1.00 BushCorn/LH - 0.50 - 0.67 - answer - 2/3 of a bushel of corn per umbrella; two bushels of corn per umbrella. The table below shows the number of labor hours required to produce one gallon of wine and one pound of cheese in the United States and France. What is the relative price of cheese (the price of cheese in terms of wine) in France under a no-trade situation? LH to Make - USA - France 1G of Wine - 4.00 - 1.00 1lb Cheese - 1.00 - 2.00 - answer - Two gallons of wine per pound The table below shows the number of labor hours required to produce one gallon of wine and one pound of cheese in the United States and France. The opportunity cost of producing cheese in the United States is LH to Make - USA - France 1G of Wine - 4.00 - 1.00 1lb Cheese - 1.00 - 2.00 - answer - 0.25 gallon of wine. The table below shows the number of labor hours required to produce one gallon of wine and one pound of cheese in the United States and France. The United States has an absolute advantage in the production of LH to Make - USA - France 1G of Wine - 4.00 - 1.00 1lb Cheese - 1.00 - 2.00 - answer - Only cheese. Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y produced in Country A and Country B per labor hour. If Country B transfers one labor hour from the production of Good X to the production of Good Y, total world production of Good Y will _____ by _____ unit(s). Productivity - Country A - Country B Good X - 1.00 - 0.50 Good Y - 0.20 - 0.70 - answer - increase; 0.7 Vineland and Moonited Republic produce wine and cheese. The opportunity cost for the production of a bottle of wine in Vineland is two pounds of cheese, and in the Moonited Republic is 2.5 pounds of cheese. Based on this information, it can be concluded that - answer - Vineland has a comparative advantage in the production of wine. Labor productivity refers to: - answer - the number of units of output a worker can produce in one hour. When Adam Smith presented his theory of absolute advantage, he assumed that all "value" in an economy was determined by and measured in terms of the _____ used in the production of the various goods. - answer - labor hours If Country X has higher labor productivity in the production of umbrellas than the rest of the world, we would say that Country X has a(n) _____ in the production of umbrellas. - answer - absolute advantage In the figure below, AB is the production-possibility curve of Canada. The line PQ shows the price ratio of one bushel of wheat/bale of cotton. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I1 and I2 are two of the community indifference curves of Canada. After Canada engages in free trade, it will: - answer - produce at point S1 and consume at point C1. *Graph 2* In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the community indifference curves of Canada. In the absence of trade Canada will: - answer - produce and consume at point C0. *Graph 3* A country which has a higher ratio of capital to other facto