03 Interdependence and the Gains from Trade(1)

曼昆经济学原理英文书The Economics Principles by MankiwChapter 1: Ten Principles of EconomicsChapter 2: Thinking Like an EconomistChapter 3: Interdependence and the Gains from Trade Chapter 4: The Market Forces of Supply and Demand Chapter 5: Elasticity and Its ApplicationChapter 6: Supply, Demand, and Government Policies Chapter 7: Consumers, Producers, and Efficiency of Markets Chapter 8: Application: The Costs of TaxationChapter 9: Application: International TradeChapter 10: ExternalitiesChapter 11: Public Goods and Common Resources Chapter 12: The Design of the Tax SystemChapter 13: The Costs of ProductionChapter 14: Firms in Competitive MarketsChapter 15: MonopolyChapter 16: Monopolistic CompetitionChapter 17: OligopolyChapter 18: The Markets for Factors of Production Chapter 19: Earnings and DiscriminationChapter 20: Income Inequality and PovertyChapter 21: Introduction to MacroeconomicsChapter 22: Measuring a Nation's IncomeChapter 23: Measuring the Cost of LivingChapter 24: Production and GrowthChapter 25: Saving, Investment, and the Financial System Chapter 26: The Basic Tools of FinanceChapter 27: UnemploymentChapter 28: The Monetary SystemChapter 29: Money Growth and InflationChapter 30: Open-Economy Macroeconomics: Basic Concepts Chapter 31: A Macroeconomic Theory of the Open Economy Chapter 32: Aggregate Demand and Aggregate SupplyChapter 33: The Influence of Monetary and Fiscal Policy on Aggregate DemandChapter 34: The Short-Run Trade-Off between Inflation and UnemploymentChapter 35: The Theory of Consumer ChoiceChapter 36: Frontiers of MicroeconomicsChapter 37: Monopoly and Antitrust PolicyChapter 38: Oligopoly and Game TheoryChapter 39: Externalities, Public Goods, and Environmental Policy Chapter 40: Uncertainty and InformationChapter 41: Aggregate Demand and Aggregate Supply Analysis Chapter 42: Understanding Business CyclesChapter 43: Fiscal PolicyChapter 44: Money, Banking, and Central BankingChapter 45: Monetary PolicyChapter 46: Inflation, Disinflation, and DeflationChapter 47: Exchange Rates and the International Financial SystemChapter 48: The Short - Run Trade - Off between Inflation and Unemployment RevisitedChapter 49: Macroeconomic Policy: Challenges in the Twenty - First CenturyEpilogue: 14 Big IdeasNote: The chapter titles have been abbreviated for simplicity and brevity purposes.。

关键术语1.相互依赖Interdependence: The (economic) relationships among nations, is given by the ratio of their imports and exports of goods and services.2.国际贸易理论International Trade Theory: Analyzes the basis and the gains from trade.3.国际贸易政策International Trade Policy: Examines the reasons for and effects of trade restrictions英文阅读材料1.Gains from Trade LiberalizationFive major kinds of gains from free trade can be identified; however, there is considerable overlap among them. These gains come from unilateral policy shifts as well as from the liberalization that takes place through regional and multilateral negotiations. Quantitative estimates and further elaboration of the gains from liberalization will be found in a recent OECD book (1998b).Static GainFree trade allows countries to export those goods and services that the, can make efficiently, and to import those goods and services that they. make inefficiently. ‘Efficiency’is measured in relative terms, not in absolute terms. For example, while the United States has an absolute advantage in the production ofboth aircraft and apparel by comparison with China-in the sense that the United States requires fewer man years to produce either a civilian airplane or a container load of blue jeans than China--both countries gain when the United States concentrates its higher-skilled workforce on producing and exporting aircraft, and China specializes in producing and exporting apparel.The static gains from free trade--the gains that would come from the free exchange of goods and services when each country uses the same techn010gv before and after free trade-are typically estimated at less than two percent of GNP. In the context of the Uruguay Round, it was roughly calculated that the static gains from the negotiated reduction in industrial tariffs and agricultural barriers would grow the global economy by about $ 40 billion, of which about $ 30 billion would be realized by advanced countries and $ 10 billion by developing countries. While they are not trivial. static gains a10ne do not measure the full benefits of liberalization.Consumer SavingsTrade results in lower prices, enabling consumers to buy more with their Paychecks. Estimates published by the Institute for International Economics suggest that totally freemerchandise trade would save American consumers about 1.2% of U.S. GNP; Japanese consumers about 5% of Japanese GNP; and Korean consumers about 4% of Korean GNP (Herbier and Elliott, 1994, Sazana-mi et al,1995,Kim,1996). These savings occur even when markets are com. petitive without free trade. These measures are another way of computing static gains.Trade also introduces more competition into domestic markets. Undermining anticompetitive practices that usually prevail when domestic producers face few foreign challenges. Industries shielded from foreign competition often charge higher prices, have little incentive to hold down costs and often indulge slack management style. By injecting greater competition into sheltered domestic markets, international commerce forces national producers to live up to their potential. In recent years, the most dramatic example has been the fast-paced drop in international telecom rates as erstwhile monopolies have faced new competition. Simulation exercises carried out by Atje and Herbier (1996) suggest that when free trade converts a monopoly industry into a competitive industry, the efficiency gains are several times larger than the static gains resulting from the free trade among competitive industries.Higher Wages and More Stable EmploymentOver the last decade, jobs supported by US exports rose four times faster than overall private-industry job creation.Consequently,12 million Americans now owe their jobs to exports, out of a civilian labor force of 67 million people. The research of Richardson and Rindal (1 995,1 996)shows that both production and non-production workers in US exporting firms receive on average about 14 percent higher pay than workers in firms that do not export. Export-oriented firms tend to have more stable employment patterns. Similar stories can probably be told for other countries that have increased the trade share of their economies.Gains in Total Factor ProductivityFree trade exposes countries to new production and management technologies that foster higher productivity at both the firm and industry. level. Twenty years ago, American auto firms began learning from Japan how to produce cars more cheaply. Today, financial institutions in Tokyo are learning from the United States how to run banks and pension funds. These gains are closely linked to cross-border direct investment(foreign direct investment, or FDI).In fact, a major purpose of trade agreements is to promote investment, thereby simultaneously encouraging intra-firm trade by multinational corporations (MNCs) and higher productivity among au local firms that compete with MNCs.Catch-up BenefitsOne of the biggest gains from free trade in goods, services and capital is the opportunityfor poorer countries to raise their productivity and income toward the levels already reached by richer countries. Research by Barro (1991,1994), Sala-I-Martin (1991), Ben-David (1995), and others cited later suggest that free trade helps close the income gap between poor and rich countries at a rate of about one-half of one percentage point per year faster than might otherwise occur. The catch-up largely reflects the acquisition of better technology, and improved management, and the spur to productivity that accompanieskeen competition and foreign direct investment.2.The Relative Importance of Regional Versus Multilateral Trade AgreementsThere are now more than 100 viable regional groups and bilateral free trade agreements. These are not going to wither away. The debate between the ‘multilateralism-only’ school, led by Jagdish Bhagwati, and: he more pragmatic ‘regionalism plus unilateralism’school.1ed by C. Fred Bergsten and Lawrence Summers, will be won by. the pragmatists. To the extent negotiations are important for liberalization. some will be done in regional groups, some in multilateral groups. In twenty years. the obligations in the various groups will over. 1ap and merge. just like the overlapping jurisdiction of state and federal coups in the United States. The distinctions will concern lawyers. not economists. Meanwhile. the negotiating work carried out in multiple venues will preserve and sharpen the skills of career civil servants and business lobbyists. This ‘training’function is important to maintain a professional constituency for liberalization.That said, regional groups could play two special roles among developing countries. One role would be the acceleration of liberalization and enhancement of policy credibility among developing countries that both choose to, and are in. vited to, associate with one of the super-regional groups(European Union, NAFTA or Mercosur), or with the Australia-New Zealand CER f a relevant option for ASEAN countries).Developing countries that follow this route will sharply diminish the trade barriers portrayed in Table 8 and rapidly open them. selves to foreign investment in all sectors.A second role could come from regional groups between developing countries themselves. Admittedly, as we have already described, the obstacles are, formidable and the historical record is short on successes. However. there is one example of a successful group of developing countries, Mercosur, anchored on Brazil. Conceivably, similar groups could be anchored on India, Egypt, South Africa, Russia, China or even Nigeria. Although we do not have the data at hand to support this guess, we believe that there is considerable scope for enlarging bilateral trade between many developing countries in several of these neighborhoods. The countries in question often have a long record of political antagonism that has soured commercial relations, leading to very high barriers; in addition, their communications and transportation links are often weak or non-existent. We believe thatgravity model contrasts between actual and predicted trade flows would forecast a very sharp increase in bilateral commerce if meaningful FTAs were put in place between neighboring countries. Frankel’s estimates(1997,83)suggest that the typical member of the European Community in 1990 may have traded as much as 65 percent more with its partners on account of the EC. We think the pro-trade effects between developing countries could be much larger, because their starting barriers are often higher than Europe faced in the 1960s. Nevertheless, we conclude with a reminder about the obstacles to meaningful FTAs among small and medium·-sized developing countries. It would be remarkable if more than two new regional groups emerge with the same vitality as Mercosur in the next twenty years.关键术语1.重商主义Mercantilism: A system of government policies and institutions aimed at increasing exports and decreasing imports. The mercantilists maintained that the way for a nation to become rich and powerful was to export more than it imported. The resulting export surplus would then be settled by an inflow of bullion, or precious metals,primarily gold and silver. The more gold and silver a nation Had, the richer and more powerful it was.2.国际分工International Division of Labor: Specialization by nations in the production of only a few goods.3.绝对优势Absolute Advantage: The ability of a country to produce a good using fewer productive inputs than is possible anywhere else in the world.4.劳动价值论Labor Theory of Value: The value or price of a commodity depends exclusively on the amount of labor going into the production of the commodity.5.比较优势Comparative Advantage: The nation should specialize in the production of and export the commodity in which its absolute disadvantage is smaller (this is the commodity of its comparative advantage)and import the commodity in which its absolute disadvantage is greater(this is the commodity of its comparative disadvantage).6.生产可能性边界The production Possibility Frontier: A curve that shows the alternative combinations of the two commodities that a nation can produce by fully utilizing all of its resources with the best technology available to it.7.机会成本Opportunity Cost: The cost of a commodity is the amount of a second commodity that must be given up to release just enough resources to produce one additional unit of the first commodity.英文阅读材料1. The Central Belief 0f MercantilismMercantilists viewed international trade as a source of major benefits to a nation. Merchants engaged in trade, especially those selling exports, were good hence the name mercantilism. But mercantilists also maintained that government regulation of trade was necessary to provide the largest national benefits. Trade merchants would serve their own interests and not the national interest, in the absence of government guidance.A central belief of mercantilism was that national well-being or wealth was based on national holdings of gold and silver (specie or bullion). Given this view of national wealth, exports were viewed as good and imports(except for raw materials not produced at home)were seen as bad. If a country sells (exports) more to foreign buyers than the foreigners sell to the country (the country’s imports), then the foreigners have to pay for the excess of their purchases by shipping gold and silver to the country. The gain in gold and silver increases the country’s well-being, according to the mercantilist belief. Imports are undesirable because they reduce the country’s ability to accumulate these precious metals. Imports were also feared because they might not be available to the country in time. In addition, gold and silver accruing to the national rulers could be especially valuable in helping to maintain a large military for the country. Based on mercantilist thinking, governments imposed an array of taxes and prohibitions designed to limit imports and subsidized and encouraged exports.Because of its peculiar emphasis on gold and silver, mercantilism viewed trade as a zero-sum activity-one country’s gains come at the expense of some other countries, since a surplus in international trade for one country must be a deficit for some other(s).The focus on promoting exports and limiting imports also provided major benefits for domestic producer interests(jn both exporting and import-competing industries).Although the propositions of the mercantilists have been refuted, and countries no 10nger focus on piling gold and silver, Mercantilist thinking is still very much alive today. It now has sharp focus on employment. Neo-mercantilists believe that exports are good because they create jobs in the country. Imports are bad because they take jobs from the country and give them to foreigners: once again trade is depicted as a zero-sum activity. There is no recognition that trade can bring gains to all countries(including mutual gains in employment as prosperity rises throughout the world). Although it does not always win the policy debates. mercantilist thinking pervades discussions of international trade in countriesall over the world.2. Poor Country Gains from Trade Greatly OverstatedThe Bush administration announced plans this week to move forward with bilateral and regional trade agreements in President Bush’s second term. But the W0rld Bank has cast doubt on the benefits to developing countries from these agreements in its Global Economic Prospects 2005. A new report from the Center for Economic and P0licv Research (CEPR) entitled Poor Numbers. The Impact of Trade Liberalization on World Poverty’’by Mark Weisbrot, David Rosnick, and Dean Baker, similarly finds that gains to developing countries from trade liberalization are smaller in reality than the numbers that have been widely cited in the public debate. The authors’ calculations show that the impact of trade liberalization on poverty reduction-while not inconsequential-will be to lift less than 100 million people from a per capita income just below the international poverty line of $ 2 per day to just above $2 per day.”“The gains from trade liberalization for poor people in developing countries have been overstated,” said CEPR Economist and Co-Director Mark Weisbrot, a co-author of the report. At the same time, the costs to developing countries of complying with commercial agreements such as the WTO are often ignored. This leads to a 10t of misunderstanding regarding the potential impact of trade liberalization and the conditions that are attached to it.Cline (2004), a leading reference on this subject, projects that rich country trade liberalization would lift 540 million people out of poverty. This new CEPR study shows that the projections in Cline (2004) substantially overstate the likely benefits for three reasons. First, a calculation error led to an overstatement of approximately 17 percent in the number of people who would be lifted out of poverty. Second, the methodology used in the book-fitting the income distribution using the Gini coefficient-is arbitrary and often quite inaccurate. An equally plausible alternative methodology-fitting the income distribution using the poverty rate-yields projections that are less than a fifth as large. Third, calculating the combined impact of the economic growth projected for a period in which any trade liberalization process takes place and trade liberalization itself, shows that the impact of trade liberalization on poverty reduction is approximately 20 percent as large as the corrected Cline projections.Further, the typical person raised above the poverty line in these projections is someone with an income just below the international poverty level of $ 2 per day. Trade liberalization is projected to raise their income just above this $ 2 per day poverty level. While this gain can mean a significant improvement in the lives of some poor people, most of the people who are commonly described as being ‘pulled out of poverty’ as they cross the $ 2 per day threshold would still be seen as impoverished. Though any reduction in poverty is desirable,since poor countries are being forced to make concessions in exchange for trade liberalization in rich countries, it is important that they approach trade negotiations with a clear assessment of the size of the potential benefits. Many of these concessions, such as the enforcement of rich country patent and copyrights, impose substantial costs on developing countries. In addition, trade agreements often limit the ability of developing countries to pursue the same sort of industrial policies that rich countries used in order to develop. It is entirely possible that the cost to developing countries from paying copyright--and patent-protected prices to rich countries will equal or exceed the gains from rich country trade liberalization, as suggested by the World Bank’s preliminary research. It is only by comparing the estimated costs and benefits of international commercial agreements to developing countries that we can say whether these will benefit poor people in developing countries.关键术语1. 机会成本递增Increasing Opportunity Costs: The nation must give up more and more of one community to release just enough resources to produce each additional unit of another commodity.2. 社会无差异曲线Community Indifference Curves: Show the various combinations 0f two commodities that yield equal satisfaction to the community or nation.3. 不完全的专业化Incomplete Specialization: The continued production of both commodities in both nations with increasing costs, even in a small nation with trade.4. 交换的利益Gains from Exchange: The increase in consumption resulting from exchange alone and with the nation continuing to produce at the autarky point.5. 专业化的利益Gains from Specialization: The increase in consumption resulting from specialization in production.6.相互需求原理Reciprocal Demand Theorem: The actual price at which trade takes place depends on the trading partners’ interacting demands.7.贸易条件Trade Terms: Defined as the ratio of the price of its export commodity to the price of its import commodity.8.提供曲线Offer Curve: A curve that shows how much of its import commodity a nation demands to be willing to supply various amounts of its export commodity, or the willingness of the nation. to import and export at various relative commodity prices.英文阅读材料1.Why Protectionism Cannot Cure the Trade DeficitThe causal link between investment flows, exchange rates, and the bal ance of trade explains why protectionism cannot core a trade deficit. In his 1997 book. one World, Ready or Not, Washington journalist William Greider proposes an ‘emergency tariff ‘ of 10 or 15 percent to reduce the U.S. trade deficit. If Congress were to implement that awful idea, American imports would probably decline as intended. But fewer imports would mean fewer dollars flowing into the international currency markets, raising the value of the dollar relative to other currencies. The stronger dollar would make U.S. exports more expensive for foreign consumers and imports more attractive to Americans. Exports would fall and imports would rise until the trade balance matched the savings and investment balance.Without a change in aggregate levels of savings and investment, the trade deficit would remain largely unaffected. All the new tariff barriers would be to reduce the volume of both imports and exports, leaving Americans poorer by depriving them of additional gains from the specialization that accompanies expanding international trade.Government export subsidies would be equally ineffective in reducing the trade deficit. Partly in response to the Asian financial crisis, President Clinton proposed in his 1999 federal budget an increase in subsidies to U.S. exporters through the Export-Import Bank. By allowing certain exporters to lower their prices on sales abroad, the subsidies would stimulate foreign demand, but the greater demand for dollars needed to buy U.S. goods would bid up the dollar's value in foreign exchange markets. The stronger dollar, in turn, would raise the effective price of U.S. exports generally, offsetting any price advantage gained by the subsidies. Total exports, and hence the trade deficit, would remain unchanged. Subsidies only divert exports from less favored to more favored sectors.In theory, trade policy can indirectly affect the trade deficit by influencing a nation’s level of savings and investment. For example, a higher tariff would presumably raise government revenue through additional customs duties, thus reducing the budget deficit (or increasing the surplus) and reducing the need to borrow from abroad-resulting in a smaller trade deficit. But a tariff can also stimulate investment in the protected industry, increasing demand for foreign capital and leading to a larger trade deficit. After surveying the various theories, Labor Department economist Robert C. Shelburne concluded, ‘Trade policy islikely to have a marginal impact on savings or investment and thus only a marginal impact on the trade balance.’ Even Morenci concurs, noting that ‘changes in trade policies have had minimal effects on aggregate net exports in recent years’.Another temptation is to intervene by intentionally devaluing the national currency in the foreign exchange market. A nation’s central bank can put downward pressure on the value of its own currency by creating an excess amount of that currency and using the excess to purchase foreign currencies. A falling currency can stimulate exports and dampen demand for imports, thus reducing a trade deficit. However, a cheaper currency also means that asset values in that country drop in foreign currency terms, attracting foreign investment flows that increase the capital account(and the corresponding current account deficit). And eventually the weaker currency feeds back into the domestic economy in the form of higher overall prices, that is, inflation. In the long run, higher domestic prices will offset any price advantage gained in the international market. place by a ‘competitive devaluation’Proven Trade-Deficit Cutter: A RecessionOne way to reduce the trade deficit would be for Americans to save more. A larger pool of national savings would reduce demand for foreign capital; with less foreign capital flowing into the country, the gap between what we buy from abroad and what we sell would shrink.A related way to cut the trade deficit is for the government to borrow less. Reducing the government deficit (a form of ‘disserving’) releases more funds for domestic investment, reducing the demand for foreign capital. That explains the’twin deficits’ phenomenon of the 1980s, when huge federal budget deficits claimed a rising share of national savings, requiring the importation of savings from abroad to meet domestic demand for investment. The inflow of foreign capital prompted by the budget deficit allowed Americans to buy even more goods and services than they sold in the international marketplace. As the federal budget deficit declined in the late 1980s, so too did America’s trade deficit.Figure 1The Trade Balance and U.S. RecessionsAnother, less appealing way to reduce the trade deficit is to reduce invest. ment. That occurs more or less naturally during times of recession, when business confidence falls and companies cut back on expansion plans. As Americans consume and invest less, demand for imports and foreign c印ital falls a10ng with the trade deficit. That explains why the smallest U.S. trade deficit since the early 1980s occurred in 1991, in the midst of the most recent recession. In tact, the U.S. current account balance tends to shrink during times of recession and grow during economic expansions. If the trade deficit really is one of our nat’0n s most pressing problems, the surest and swiftest way to tackle it would be to engineer a deep recession.That is exactly what happened to Mexico in 1995. In the aftershock of the Peso crisis, Mexico’s real GDP shrank in 1995 by 6.2 percent. Because of falling domestic demand, fleeing capital, and a plunging peso. Mexico’s overall trade balance flipped from a deficit in 1994 to a surplus in 1995. Mexico’s bilateral balance with the United States did the same, going from a deficit to a surplus. That supposed ‘trade debacle’ for the United States had nothing to do with NAFTA or any other change in trade policy. It was caused by mismanagement on the part of Mexico’s monetary authorities, and the chief victims of that mismanagement were Mexican workers. Perhaps NAFTA critics who believe our bilateral trade deficit with Mexico is such a terrible development would have preferred that the U.S. economy, not the Mexican economy, contract 6.2 percent in one year. of course, American workers would have suffered, but it would have done wonders for our bilateral trade balance.An understanding of the all-important role of investment flows should liberate trade policy from its obsessive focus on the current account balance. The trade deficit is not a function of trade policy, and therefore trade policy cannot be a tool for reducing the tradedeficit.2. Myth: ‘U.S. Exporters Face Unfair Trade Barriers’Many Americans are convinced that a bilateral trade deficit proves that the foreign country’s market is relatively closed to U.S. exports compared with the ‘open’ U.S. market. America’s large bilateral deficit with Japan is almost unanimously seen as a problem by U.S. policymakers who share that view, with blame for the deficits placed squarely on ‘unfair’foreign trade barriers. A survey of America’s major trading partners challenges that assumption. Countries with which the United States runs large deficits are not characteristically more protectionist toward U.S. exports than are those with which we run asurplus. Canada and Mexico, two countries that are very open to U.S. exports thanks in part to NAFTA, are both among the five countries with which the United States has the largest bilateral trade deficits. on the other side, America’s third largest bilateral trade surplus is with Brazil, a country whose barriers to imports remain relatively high. Americans face a common external tariff when exporting to members of the European Union, yet some EU members (the Netherlands and Belgium)are among the top surplus trade partners, and Others (Germany and Italy)are among the top deficit partners. Trade policy cannot explain those differences (Table 1).Table 1America’s Top 10 Bilateral Deficits and Surpluses t997(billions of U.S. $)Source: U. S Department of Commerce, Bureau of the Census, Foreign Trade Division, at www. census. Gov/foreign trade.Blaming bilateral deficits exclusively on differences in trade policy once again misses the reality of investment flows. In Japan, high domestic savings rates provide a pool of capital that far exceeds domestic investment opportunities. Japan ‘exports’capital to the United States, which allows Americans to import more goods from Japan than we export. The main reason that America’s bilateral trade deficit with Japan exploded in the 1 980s isthat the Japanese government lifted many of its capital controls with the passage of the Foreign Exchange and Foreign Trade Control Law in December 1 980.That allowed Japanese savings to flow across the Pacific to the United States, where it could draw a more favorable rate of return.Despite the common perception, Japan was actually more open to U. S. exports in the 1980s than in the 1960s and 1970s, when American bilateral trade deficits with Japan were much smaller. As Robert T. Parry, president and chief executive officer of the Federal Reserve Bank of San Francisco. explained:Of all the U. S. trading partners, Japan continues to be singled out for having the most unfair trading practices. But it's doubtful that such policies have been a major cause of U.S. trade deficits. First of all, the Japanese market has become somewhat more open-not more closed-over the past decade. Second, Japan’s share of changes in the total U.S. non-oil merchandise trade deficit has been proportional to its U.S. trade share. For example, in 1 98 1.about 9 percent of our exports went to Japan, and about 20 percent of our imports came from Japan. That left US with a bilateral deficit of $ 16 billion. If the same shares prevailed in 1992. we would have had a bilateral deficit of $ 57 billion-which is in fact a little larger than the actual deficit of $ 51 billion. So I think there’s not much evidence to say that restrictive trade practices have been the driving force behind changes in the U.S. trade deficit.The same cannot be said for our bilateral deficit with China. Despite substantial progress in the last 10 years, its barriers to imports remain relatively high. Those barriers partly explain the bilateral surplus China runs with the United States, but the primary explanation is more benign: We like to consume the products China sells. In 1995 the Council of Economic Advisers concluded, ‘China’s persistent surplus with the United States in part reflects its specialization in inexpensive mass. market consumer goods. China similarly runs bilateral surpluses with Japan and Europe for this reason.’If China were to further open its market. America’s bilateral deficit with China would probably shrink, but our overall trade deficit--determined by aggregate savings and investment--would remain largely unaffected. A rising dollar caused by increased demand for U.S. exports to China would lead to larger bilateral deficits (or smaller surpluses) with other U.S. trading partners. If the United States were to impose higher tariffs aimed at imports from China (say, by revoking its Most Favored Nation status), that too might reduce the bilateral deficit, but not the overall U.S. trade deficit. Higher tariffs against Chinese imports would merely shift some of the bilateral trade deficit to other countries while raising prices for American consumers.。

Chapter 3Interdependence and the Gains from Trade Test A1. A country’s consumption possibilities frontier can be outside its production possibilities frontiera. with trade.b. by allocating resources differently.c. by lowering unemployment in the country.d. by producing a greater variety of goods and services.2. If labor in Mexico is less productive than labor in the United States in all areas of production,a. neither nation can benefit from trade.b. Mexico can benefit from trade but the United States cannot.c. both nations can benefit from trade.d. Mexico will not have a comparative advantage in any good.22 Chapter 3/Interdependence and the Gains from Trade3. Refer to the table shown. For the Farmer, the opportunity cost of 1 pound of meat isa. 1/2 pound of potatoesb. 2 pounds of potatoes.c. 4 hours of labor.d. 8 hours of labor.4. Refer to the table shown. For the Rancher, the opportunity cost of 1 pound of meat isa. 1 hour of labor.b. 5 hours of labor.c. 4 pounds of potatoes.d. 1/4 pound of potatoes.5. Refer to the table shown. For the Farmer, the opportunity cost of 1 pound of potatoes isa. 1/2 pound of meat.b. 2 pounds of meat.c. 4 hours of labor.d. 8 hours of labor.6. Refer to the table shown. For the Rancher, the opportunity cost of 1 pound of potatoes isa. 4 hours of labor.b. 2 hours of labor.c. 4 pounds of meat.d. 1/4 pound of meat.7. Refer to the table shown. The Farmer has an absolute advantage in ______ and the Rancher has anabsolute advantage in ______.a. meat, meatb. meat, potatoesc. potatoes, meatd. neither good, both goods8. Refer to the table shown. The Rancher has a comparative advantage in ______ and the Farmer has acomparative advantage in ______.a. meat, potatoesb. both goods, neither goodc. potatoes, meatd. neither good, both goods9. Refer to the table shown. The Farmer and Rancher both could benefit by the Farmer specializing in______ and the Rancher specializing in ______.a. potatoes, meatb. meat, potatoesc. neither good, meatd. They cannot benefit by specialization and trade.Chapter 3/Interdependence and the Gains from Trade 23 These figures illustrate the production possibilities available to Tom and Nicole with 40 hours of labor.10. Refer to the graphs shown. The opportunity cost of 1 video for Tom isa. 1/2 book.b. 1 book.c. 2 books.d. 4 books.11. Refer to the graphs shown. The opportunity cost of 1 video for Nicole isa. 1/40 book.b. 1/8 book.c. 8 books.d. 40 books.RANDOM: N12. Refer to the graphs shown. The opportunity cost of 1 book for Nicole isa. 1/40 video.b. 1/8 video.c. 5 videos.d. 8 videos.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N13. Refer to the graphs shown. The opportunity cost of 1 book for Tom isa. 1/4 video.b. 1/2 video.c. 2 videos.d. 4 videos.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N24 Chapter 3/Interdependence and the Gains from Trade14. Refer to the graphs shown. Nicole has an absolute advantage in ______ and Tom has an absoluteadvantage in ______.a. books, videosb. videos, booksc. both goods, neither goodd. neither good, both goodsTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N15. Refer to the graphs shown. Nicole has a comparative advantage in ______ and Tom has acomparative advantage in ______.a. books, videosb. both goods, neither goodc. videos, booksd. neither good, booksTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N16. Refer to the graphs shown. Nicole should specialize in ______ and Tom should specialize in ______.a. videos, booksb. books, videosc. both goods, videosd. books, neither goodTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N17. Refer to the graphs shown. If Tom and Nicole both specialize in the good in which they have acomparative advantage, total production of books will be ______ and total production of videos will be ______.a. 42, 9b. 40, 4c. 4, 40d. 9, 42TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N18. Comparative advantage is based ona. capital costs.b. labor costs.c. dollar price.d. opportunity costs.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: Y19. Absolute advantage is found bya. comparing opportunity costs.b. calculating the dollar cost of production.c. first determining which country has a comparative advantage.d. comparing the productivity of one nation to that of another.TYPE: MKEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: YChapter 3/Interdependence and the Gains from Trade 2520. The principle of comparative advantage was developed bya. Adam Smith.b. Harry Truman.c. David Ricardo.d. John Maynard Keynes.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y21. Economists generally supporta. government management of trade.b. free international trade.c. trade restrictions.d. export subsidies.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y22. Karl Malone (1997 NBA MVP) is a better basketball player and truck driver than Gregory Mankiw(the author of your economics text). Which of the following is true?a. Karl Malone and Gregory Mankiw may benefit from trade.b. Karl Malone would be better off playing basketball and driving his own truck.c. Karl Malone will probably have a comparative advantage in both goods.d. Karl Malone will have a lower opportunity cost of playing basketball and truck driving thanwill Gregory Mankiw.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y23. Exports area. a limit placed on the quantity of goods brought into a country.b. goods produced domestically and sold abroad.c. usually a country’s least desirable product.d. goods produced abroad and sold domestically.TYPE: M KEY1: T SECTION: 3 OBJECTIVE: 4RANDOM: Y24. The United States could benefit bya. promoting imports and restricting exports.b. restricting imports and promoting exports.c. restricting both imports and exports.d. not restricting trade.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y25. The gains from trade area. higher from trade between a rich nation and a poor nation.b. a result of more efficient resource allocation.c. based on different wage rates between nations.d. based on the principle of absolute advantage.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y1 ANSWER: a. with trade.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y2 ANSWER: c. both nations can benefit from trade.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 1 RANDOM: Y26 Chapter 3/Interdependence and the Gains from Trade3 ANSWER: b. 2 pounds of potatoes.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y4 ANSWER: c. 4 pounds of potatoes.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y5 ANSWER: a. 1/2 pound of meat.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y6 ANSWER: d. 1/4 pound of meat.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y7 ANSWER: d. neither good, both goodsTYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y8 ANSWER: c. potatoes, meatTYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 1 RANDOM: Y9 ANSWER: b. meat, potatoesTYPE: M KEY1: T SECTION: 2 OBJECTIVE: 3 INSTRUCTION: 1 RANDOM: Y10 ANSWER: a. 1/2 book.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N11 ANSWER: c. 8 books.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N12 ANSWER: b. 1/8 video.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N13 ANSWER: c. 2 videosTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: NChapter 3/Interdependence and the Gains from Trade 27 14 ANSWER: c. both goods, neither goodTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N15 ANSWER: a. books, videosTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N16 ANSWER: b. books, videosTYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N17 ANSWER: b. 40, 4TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION INSTRUCTION: 4 RANDOM: N18 ANSWER: d. opportunity costs.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: Y19 ANSWER: d. comparing the productivity of one nation to that of another.TYPE: MKEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: Y20 ANSWER: c. David Ricardo.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y21 ANSWER: b. free international trade.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y22 ANSWER: a. Karl Malone and Gregory Mankiw may benefit from trade.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y23 ANSWER: b. goods produced domestically and sold abroad.TYPE: M KEY1: T SECTION: 3 OBJECTIVE: 4RANDOM: Y24 ANSWER: d. not restricting trade.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y25 ANSWER: b. a result of more efficient resource allocation.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 4 RANDOM: Y28 Chapter 3/Interdependence and the Gains from Trade。

Chapter 3Interdependence and the Gains from TradeTRUE/FALSE1. In most countries today, many goods and services consumed are imported from abroad, and many goods andservices produced are exported to foreign customers.ANS: T DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Definitional2. Interdependence among individuals and interdependence among nations are both based on the gains fromtrade.ANS: T DIF: 2 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive3. If a person chooses self-sufficiency, then she can only consume what she produces.ANS: T DIF: 1 REF: 3-1NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Self-sufficiency MSC: Definitional4. If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, thenWrex cannot gain from trading math problems and book reports with Maxine.ANS: F DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative5. It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours toproduce every good than it takes German workers.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative6. A production possibilities frontier is a graph that shows the combination of outputs that an economy shouldproduce.ANS: F DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive7. Production possibilities frontiers cannot be used to illustrate tradeoffs.ANS: F DIF: 1 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Definitional8. An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce atpoints outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive9. Trade allows a country to consume outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier | Trade MSC: Interpretive10. Opportunity cost refers to how many inputs a producer requires to produce a good.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Definitional12811. Opportunity cost measures the trade-off between two goods that each producer faces.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Definitional12. For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunitycost of the other good.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Interpretive13. Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost toHenry of making a bird house is 1/3 bird feeder.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative14. Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Then Dewey’sopportunity cost of producing one bushel of corn is 1/2 yard of cloth.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative15. Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can completean oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative16. Harry is a computer company executive, earning $200 per hour managing the company and promoting itsproducts. His daughter Quinn is a high school student, earning $6 per hour helping her grandmother on the farm. Harry's computer is broken. He can repair it himself in one hour. Quinn can repair it in 10 hours.Harry’s opportunity cost of repairing the computer is lower than Quinn’s.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative17. If one producer has the absolute advantage in the production of all goods, then that same producer will havethe comparative advantage in the production of all goods as well.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive18. If a country has the comparative advantage in producing a product, then that country must also have theabsolute advantage in producing that product.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive19. In an economy consisting of two people producing two goods, it is possible for one person to have theabsolute advantage and the comparative advantage in both goods.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive20. If one producer is able to produce a good at a lower opportunity cost than some other producer, then theproducer with the lower opportunity cost is said to have an absolute advantage in the production of that good. ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Definitionalword文档可自由复制编辑130 Chapter 3 /Interdependence and the Gains from Trade21. Unless two people who are producing two goods have exactly the same opportunity costs, then one person willhave a comparative advantage in one good, and the other person will have a comparative advantage in the other good.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Interpretive22. Zora can produce 4 quilts in a week and she can produce 1 corporate website in a week. Lou can produce 9quilts in a week and he can produce 2 corporate websites in a week. Zora has the comparative advantage in quilts and the absolute advantage in neither good, while Lou has the comparative advantage in corporatewebsites and the absolute advantage in both goods.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Applicative23. Timmy can edit 2 pages in one minute and he can type 80 words in one minute. Olivia can edit 1 page in oneminute and she can type 100 words in one minute. Timmy has an absolute advantage and a comparativeadvantage in editing, while Olivia has an absolute advantage and a comparative advantage in typing.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Applicative24. Suppose Hank and Tony can both produce corn. If Hank’s opportunity cost of producing a bushel of corn is2 bushels of soybeans and Tony’s opportunity cos t of producing a bushel of corn is3 bushels of soybeans,then Hank has the comparative advantage in the production of corn.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Applicative25. It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Specialization MSC: Applicative26. The principle of comparative advantage states that, regardless of the price at which trade takes place, everyonewill benefit from trade if they specialize in the production of the good for which they have a comparativeadvantage.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Interpretive27. The gains from specialization and trade are based on absolute advantage.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional28. Trade can benefit everyone in society because it allows people to specialize in activities in which they have acomparative advantage.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional29. Two countries can achieve gains from trade even if one country has an absolute advantage in the production ofboth goods.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive30. It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative31. Differences in opportunity cost allow for gains from trade.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive32. As long as two people have different opportunity costs, each can gain from trade with the other, since tradeallows each person to obtain a good at a price lower than his or her opportunity cost.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive33. Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because eachperson specializes in the activity for which he or she has the lower opportunity cost.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive34. When each person specializes in producing the good in which he or she has a comparative advantage, eachperson can gain from trade but total production in the economy is unchanged.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive35. For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the twoopportunity costs.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive36. Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional37. David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional38. Adam Smith wrote that a person should never attempt to make at home what it will cost him more to makethan to buy.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional39. Adam Smith developed the theory of comparative advantage as we know it today.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists | Comparative advantage MSC: Definitionalword文档可自由复制编辑132 Chapter 3 /Interdependence and the Gains from Trade40. Goods produced abroad and sold domestically are called exports and goods produced domestically and soldabroad are called imports.ANS: F DIF: 1 REF: 3-3NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Exports | Imports MSC: Definitional41. International trade may make some individuals in a nation better off, while other individuals are made worseoff.ANS: T DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive42. For international trade to benefit a country, it must benefit all citizens of that country.ANS: F DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive43. Some countries win in international trade, while other countries lose.ANS: F DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive44. Trade can make some individuals worse off, even as it makes the country as a whole better off.ANS: T DIF: 1 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional45. Trade allows all countries to achieve greater prosperity.ANS: T DIF: 1 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: DefinitionalSHORT ANSWER1. Explain the difference between absolute advantage and comparative advantage. Which is more important indetermining trade patterns, absolute advantage or comparative advantage? Why?ANS:Absolute advantage refers to productivity, as in the producer who can produce a product at a lower cost in terms of the resources used in production. Comparative advantage refers to the producer who can produce a product at a lower opportunity cost. Comparative advantage is the principle upon which trade patterns are based. Comparative advantage is based on opportunity cost, and opportunity cost measures the real cost to an individual or country of producing a particular product. Opportunity cost is therefore the information necessary for an individual or nation to determine whether to produce a good or buy it from someone else.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage | Trade MSC: Interpretiveword 文档 可自由复制编辑2. The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.Alpha’s Production Possibilities FrontierOmega’s Production Possibilities Frontier255075100125150175200225250255075100125150175200225250275300255075100125150175200225255075100125150175200225250275300a. Assume that each country decides to use half of its resources in the production of each good.Show these points on the graphs for each country as point A.b. If these countries choose not to trade, what would be the total world production of popcorn andpeanuts?c. Now suppose that each country decides to specialize in the good in which each has acomparative advantage. By specializing, what is the total world production of each product now?d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on thegraphs the gain each country would receive from trade. Label these points B.ANS:Alpha’s Production Possibilities FrontierOmega’s Production Possibilities Frontier255075100125150175200225250255075100125150175200225250275300255075100125150175200225255075100125150175200225250275300134 Chapter 3 /Interdependence and the Gains from Tradea.Alpha would be producing 125 units of peanuts and 75 units of popcorn (point A on its productionpossibilities frontier) and Omega would be producing 50 units of peanuts and 150 units of popcorn(point A on its production possibilities frontier).b.The total world production of peanuts would be 175 units and the total world production of popcornwould be 225 units.c.The total world production of peanuts would now be 250 units and the total world production ofpopcorn would now be 300 units.d.Alpha would be producing 250 units of peanuts and would trade 100 of them to Omega, leavingAlpha with 150 units of peanuts. Alpha would then receive 100 units of popcorn from Omega.Omega would be producing 300 units of popcorn and would trade 100 of them to Alpha, leavingOmega with 200 units of popcorn. Omega would then receive 100 units of peanuts from Alpha.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and tradeTOP: Production possibilities frontier | Gains from trade MSC: Applicative3. Julia can fix a meal in 1 hour, and her opportunity cost of one hour is $50. Jacque can fix the same kind ofmeal in 2 hours, and his opportunity cost of one hour is $20. Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.ANS:Since Julia's opportunity cost of preparing a meal is $50, and Jacque's opportunity cost of preparing a meal is $40, each of them will be better off by $5 per meal if this arrangement is made.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and trade TOP: Gains from tradeMSC: Applicative4. Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they mustdo a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.a.How much time would it take the two to complete the project if they divide the calculations equally andthe slides equally?b.How much time would it take the two to complete the project if they use comparative advantage andspecialize in calculating or preparing slides?c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for eachto specialize in calculating or preparing slides?ANS:a.If both tasks are divided equally, it will take 11 hours for the calculations and 15 hours for the writing,for a total of 26 hours.b.If Diane specializes in calculating and Gary specializes in preparing slides, it will take 22 hours tocomplete the project.c.If Diane specializes in calculating, her opportunity cost will be $60; hence, Diane would be better off ifshe paid Gary any amount less than $60 to do the calculating. Since Gary's opportunity cost of doing thecalculations is only $50, he would be better off if Diane paid him between $50 and $60 dollars to do thecalculations. In this case, the total time spent on the project would be 20 hours.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and trade TOP: Gains from tradeMSC: ApplicativeSec00 - Interdependence and the Gains from TradeMULTIPLE CHOICE1. People who provide you with goods and servicesa.are acting out of generosity.b.do so because they get something in return.c.have chosen not to become interdependent.d.are required to do so by the government.ANS: B DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Definitional2. When an economist points out that you and millions of other people are interdependent, he or she is referringto the fact that we alla.rely upon the government to provide us with the basic necessities of life.b.rely upon one another for the goods and services we consume.c.have similar tastes and abilities.d.are concerned about one another’s well-being.ANS: B DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Interdependence MSC: DefinitionalSec01 - Interdependence and the Gains from Trade - A Parable for the Modern EconomyMULTIPLE CHOICE1. Which of the following is not a reason people choose to depend on others for goods and services?a.to improve their livesb.to allow them to enjoy a greater variety of goods and servicesc.to consume more of each good without working any more hoursd.to allow people to produce outside their production possibilities frontiersANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Interpretive2. When can two countries gain from trading two goods?a.when the first country can only produce the first good and the second country can only produce thesecond goodb.when the first country can produce both goods, but can only produce the second good at great cost,and the second country can produce both goods, but can only produce the first good at great costc.when the first country is better at producing both goods and the second country is worse atproducing both goodsd.Two countries could gain from trading two goods under all of the above conditions.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive3. Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, butRegan is better at producing both goods. In this case, trade coulda.benefit both Jayson and Regan.b.benefit Jayson, but not Regan.c.benefit Regan, but not Jayson.d.benefit neither Jayson nor Regan.ANS: A DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicativeword文档可自由复制编辑136 Chapter 3 /Interdependence and the Gains from Trade4. Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. Inwhich of the following cases is it impossible for both Ben and Shawna to benefit from trade?a.Ben cannot knit sweaters and Shawna cannot bake bread.b.Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters.c.Ben is better than Shawna at baking bread and at knitting sweaters.d.Both Ben and Shawna can benefit from trade in all of the above cases.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative5. Shannon bakes cookies and Justin grows vegetables. In which of the following cases is it impossible for bothShannon and Justin to benefit from trade?a.Shannon does not like vegetables and Justin does not like cookies.b.Shannon is better than Justin at baking cookies and Justin is better than Shannon at growingvegetables.c.Justin is better than Shannon at baking cookies and at growing vegetables.d.Both Shannon and Justin can benefit from trade in all of the above cases.ANS: A DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative6. The production possibilities frontier illustratesa.the combinations of output that an economy should produce.b.the combinations of output that an economy should consume.c.the combinations of output that an economy can produce.d.All of the above are correct.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive7. An economy’s production possibilities frontier is also its consumption possibilities frontiera.under all circumstances.b.under no circumstances.c.when the economy is self-sufficient.d.when the rate of tradeoff between the two goods being produced is constant.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive8. A production possibilities frontier is bowed outward whena.the more resources the economy uses to produce one good, the fewer resources it has available toproduce the other good.b.an economy is self-sufficient instead of interdependent and engaged in trade.c.the rate of tradeoff between the two goods being produced is constant.d.the rate of tradeoff between the two goods being produced depends on how much of each good isbeing produced.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive9. A production possibilities frontier is a straight line whena.the more resources the economy uses to produce one good, the fewer resources it has available toproduce the other good.b.an economy is interdependent and engaged in trade instead of self-sufficient.c.the rate of tradeoff between the two goods being produced is constant.d.the rate of tradeoff between the two goods being produced depends on how much of each good isbeing produced.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive10. The following table contains some production possibilities for an economy for a given month.If the production possibilities frontier is bowed outward, then “?” could bea.100.b.150.c.200.d.250.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative11. The following table contains some production possibilities for an economy for a given month.If the production possibilities frontier is a straight line, then “?” must bea.100.b.150.c.200.d.250.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative12. The following table contains some production possibilities for an economy for a given year.If the production possibilities frontier is bowed outward, then “?” could bea.340.b.330.c.320.d.310.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicativeword文档可自由复制编辑13. The following table contains some production possibilities for an economy for a given year.If the production possibilities frontier is a straight line, then “?” must bea.340.b.330.c.320.d.310.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative14. The following table contains some production possibilities for an economy for a given month.If the production possibilities frontier is bowed outward, then “?” could bea.50.b.75.c.100.d.125.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative15. The following table contains some production possibilities for an economy for a given month.If the production possibilities frontier is a straight line, then “?” must bea.50.b.75.c.100.d.125.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative。

《经济学原理（英语）》教学大纲“Principles of Economics” Course Outline课程编号：151103A课程类型：专业必修课总学时：48 讲课学时：48 实验（上机）学时：0学分：3适用对象：经济学、金融学、管理学等先修课程：大学英文Course Code: 151103ACourse Type: Compulsory CourseTotal Hours: 48 Lecture Hours: 48 Lab Hours: 0Credits: 3Applicable Majors: Economics, Finance, Management, etc.Prerequisites: University English一、课程的教学目标(Course Objectives)经济学原理是经济、金融类等专业的本科生的专业必修课程，旨在为学生提供基础的经济学理论以及经济学家的思维模式。

通过课堂上对经济学相关原理的学习和掌握，学生可以运用所学的概念和工具对现实生活中发生的各种经济现象进行更专业和理论的分析，并且为后续课程的学习打下坚实的基础。

Principles of Economics is a compulsory course for undergraduate students majoring in Economics, Finance etc. This course is designed to provide students with a fundamental understanding of the principles of economics and the way how an economist thinks. Upon successful completion, students will be able to use the concepts and tools discussed throughout the course to better perceive and analyze issues that confront us in the real world. At the end of the term, students will be familiar with the terminologies and basic concepts in economics in preparing for the higher level economics courses.二、教学基本要求(Course Requirements)经济学是一门对生产、分配，以及对商品货物和服务的消费的一种学习--经济。

Chapter 2Thinking Like an EconomistsTRUE OR FALSE1. Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories. (T)2. While the scientific method is applicable to studying natural sciences, it is not applicable to studying a nation’s economy. (F)3. It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories. (F)4. Good assumptions simplify a problem without substantially affecting the answer. (T)5. Assumptions can simplify the complex world and make it easier to understand. (T)6. Economic models omit many details to allow us to see what is truly important. (T)7. The circular-flow diagram explains, in general terms, how the economy is organized and how participants in the economy interact with one another. (T)8. In the circular-flow diagram, households and firms are the decision makers. (T)9. In the circular-flow diagram, factors of production are the goods and services produced by firms. (F)10. In the circular-flow diagram, firms own the factors of production and use them to produce goods and services. (F)11. In the circular-flow diagram, one loop represents the flow of goods and services, and the other loop represents the flow of factors of production. (F)12. The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology. (T)13. Refer to Figure 2-1, if this economy uses all its resources in the dishwasher industry, it produces 35 dishwashers and no doghouses. (T)Figure 2-114. Refer to Figure 2-1, it is possible for this economy to produce 75 doghouses. (F)15. Refer to Figure 2-1, it is possible for this economy to produce 30 doghouses and 20 dishwashers. (T)16. Refer to Figure 2-1, it is possible for this economy to produce 45 doghouses and 30 dishwashers. (F)17. Refer to Figure 2-1, unemployment could cause this economy to produce at point B. (T)18. Refer to Figure 2-1, the opportunity cost of moving from point A to point D is 10 dishwashers. (T)19. Refer to Figure 2-1, the opportunity cost of moving from point B to point D is 15 doghouses. (F)20. Refer to Figure 2-1, the opportunity cost of an additional doghouse increases as more doghouses are produced. (T)21. If an economy can produce more of one good without giving up any of another good, then the economy’s current producti on point is inefficient. (T)22. When a production possibilities frontier is bowed outward, the opportunity cost of the first good in terms of the second good increases as more of the second good is produced.(F)23. A production possibilities frontier wil l be bowed outward if some of the economy’s resources are better suited to producing one good than another. (T)24. While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth. (F)25. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. (T)26. Macroeconomics is the study of economy-wide phenomena. (T)27. Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements. (T)28. Normative statements describe how the world is, while positive statements prescribe how the world should be. (F)29. "Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement. (F)30. There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.(F)31. The slope of a line is equal to the change in the x-variable divided by the change in the y-variable. (F)Chapter 3 Interdependence And The Gains From TradeTRUE OR FALSE1. Interdependence among individuals and interdependence among nations are both based on the gains from trade. (T)2. If a person chooses self-sufficiency, then she can only consume what she produces. (T)3. If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, then Wrex cannot gain from trading math problems and book reports with Maxine. (F)4. Trade allows a country to consume outside its production possibilities frontier. (T)5. Opportunity cost refers to how many inputs a producer requires to produce a good. (F)6. Opportunity cost measures the trade-off between two goods that each producer faces. (T)7. For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good. (T)8. If one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well. (F)9. If a country has the comparative advantage in producing a product, then that country must also have the absolute advantage in producing that product. (F)10. If one producer is able to produce a good at a lower opportunity cost than some other producer, then the producer with the lower opportunity cost is said to have an absolute advantage in the production of that good. (F)11. Unless two people who are producing two goods have exactly the same opportunity costs, thenone person will have a comparative advantage in one good, and the other person will have a comparative advantage in the other good. (T)12. The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage. (F)13. Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage. (T)14. Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods. (T)15. As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost. (T) 16. When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged. (F) 17. For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the two opportunity costs. (F)18. David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation. (T)19. International trade may make some individuals in a nation better off, while other individuals are made worse off. (T)20. Trade can make some individuals worse off, even as it makes the country as a whole better off. (T) SHORT ANSWER1. Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why? Absolute advantage refers to productivity, as in the producer who can produce a product at a lower cost in terms of the resources used in production. Comparative advantage refers to the producer who can produce a product at a lower opportunity cost. Comparative advantage is the principle upon which trade patterns are based. Comparative advantage is based on opportunity cost, and opportunity cost measures the real cost to an individual or country of producing a particular product. Opportunity cost is therefore the information necessary for an individual or nation to determine whether to produce a good or buy it from someone else.2. The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.Alpha’s Production Possibilities Frontier Omega’s Pro duction Possibilities Frontiera.Assume that each country decides to use half of its resources in the production of eachgood. Show these points on the graphs for each country as point A.b.If these countries choose not to trade, what would be the total world production ofpopcorn and peanuts?c.Now suppose that each country decides to specialize in the good in which each has acomparative advantage. By specializing, what is the total world production of eachproduct now?d.If each country decides to trade 100 units of popcorn for 100 units of peanuts, show onthe graphs the gain each country would receive from trade. Label these points B. Alpha’s Production Possibilities Frontier Omega’s Production Possibilities Frontiera.Alpha would be producing 125 units of peanuts and 75 units of popcorn (point A on itsproduction possibilities frontier) and Omega would be producing 50 units of peanutsand 150 units of popcorn (point A on its production possibilities frontier).b.The total world production of peanuts would be 175 units and the total world productionof popcorn would be 225 units.c.The total world production of peanuts would now be 250 units and the total worldproduction of popcorn would now be 300 units.d.Alpha would be producing 250 units of peanuts and would trade 100 of them to Omega,leaving Alpha with 150 units of peanuts. Alpha would then receive 100 units of popcornfrom Omega. Omega would be producing 300 units of popcorn and would trade 100 ofthem to Alpha, leaving Omega with 200 units of popcorn. Omega would then receive100 units of peanuts from Alpha.Choice1. People who provide you with goods and services (b)a.are acting out of generosity.b.do so because they get something in return.c.have chosen not to become interdependent.d.are required to do so by the government.2. When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all (b)a.rely upon the government to provide us with the basic necessities of life.b.rely upon one another for the goods and services we consume.c.have similar tastes and abilities.d.are concerned about one another’s well-being.3. When can two countries gain from trading two goods? (d)a.when the first country can only produce the first good and the second country can onlyproduce the second goodb.when the first country can produce both goods, but can only produce the second good atgreat cost, and the second country can produce both goods, but can only produce thefirst good at great costc.when the first country is better at producing both goods and the second country is worseat producing both goodsd.Two countries could gain from trading two goods under all of the above conditions.4. Shannon bakes cookies and Justin grows vegetables. In which of the following cases is it impossible for both Shannon and Justin to benefit from trade? (a)a.Shannon does not like vegetables and Justin does not like cookies.b.Shannon is better than Justin at baking cookies and Justin is better than Shannon atgrowing vegetables.c.Justin is better than Shannon at baking cookies and at growing vegetables.d.Both Shannon and Justin can benefit from trade in all of the above cases.5. A production possibilities frontier is bowed outward when (d)a.the more resources the economy uses to produce one good, the fewer resources it hasavailable to produce the other good.b.an economy is self-sufficient instead of interdependent and engaged in trade.c.the rate of tradeoff between the two goods being produced is constant.d.the rate of tradeoff between the two goods being produced depends on how much ofeach good is being produced.” could bea.100.b.150.c.200.d.250.7. Assume for the United States that the opportunity cost of each airplane is 100 cars. Then which of these pairs of points could be on the United States' production possibilities frontier? (c)a.(200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars)b.(200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars)c.(300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)d.(300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)8. What must be given up to obtain an item is called (c)a.out-of-pocket cost.parative worth.c.opportunity cost.d.absolute value.9. A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer’s opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton (c)a.is equal to 0.b.is between 0 and 1.c.is equal to 1.d.is greater than 1.10. If Korea is capable of producing either shoes or soccer balls or some combination of the two, then(d)a.Korea should specialize in the product in which it has an absolute advantage.b.it would be impossible for Korea to have an absolute advantage over another country inboth products.c.it would be difficult for Korea to benefit from trade with another country if Korea isefficient in the production of both goods.d.Korea’s opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.11. Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 chair is (a)a.1/5 table for Mike and 1/3 table for Sandy.b.1/5 table for Mike and 3 tables for Sandy.c. 5 tables for Mike and 1/3 table for Sandy.d. 5 tables for Mike and 3 tables for Sandy.12. If Shawn can produce more donuts in one day than Sue can produce in one day, then (c)a.Shawn has a comparative advantage in the production of donuts.b.Sue has a comparative advantage in the production of donuts.c.Shawn has an absolute advantage in the production of donuts.d.Sue has an absolute advantage in the production of donuts.13. Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible? (c)a.Kelly has a comparative advantage in repairing cars and David has a comparativeadvantage in cooking meals.b.Kelly has an absolute advantage in repairing cars and David has an absolute advantagein cooking meals.c.Kelly has a comparative advantage in repairing cars and in cooking meals.d.David has an absolute advantage in repairing cars and in cooking meals.14. Comparative advantage is related most closely to which of the following? (b)a.output per hourb.opportunity costc.efficiencyd.bargaining strength in international trade15. Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity? (c)a.One individual’s production possibilities frontier is steeper than the other individual’sproduction possibilities frontier.b.One individual is faster at both activities than the other individual.c.One individual’s opportunity costs are the same as the other individual’s opportunitycosts.d.None of the above is correct; one of the two individuals always will have a comparativeadvantage in at least one of the two activities.16. Total output in an economy increases when each person specializes becausea.there is less competition for the same resources.b.each person spends more time producing that product in which he or she has acomparative advantage.c. a wider variety of products will be produced within each country due to specialization.ernment necessarily plays a larger role in the economy due to specialization.17. Which of the following statements is not correct? (d)a.Trade allows for specialization.b.Trade has the potential to benefit all nations.c.Trade allows nations to consume outside of their production possibilities curves.d.Absolute advantage is the driving force of specialization.18. By definition, imports are (d)a.people who work in foreign countries.b.goods in which a country has an absolute advantage.c.limits placed on the quantity of goods leaving a country.d.goods produced abroad and sold domestically.19. By definition, exports are (d)a.limits placed on the quantity of goods brought into a country.b.goods in which a country has an absolute advantage.c.people who work in foreign countries.d.goods produced domestically and sold abroad.20. Which of the following would not result from all countries specializing according to the principle of comparative advantage? (d)a.The size of the economic pie would increase.b.Worldwide production of goods and services would increase.c.The well-being of citizens in each country would be enhanced.d.Each country’s production possibilities frontier would shift outward.Chapter 4The Market Forces of Supply and DemandTRUE OR FALSE1. In a market economy, supply and demand determine both the quantity of each good produced and2. the price at which it is sold. (T)3. Prices allocate a market economy’s scarce resources. (T)4. Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product. (F)5. In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller. (T)6. In a perfectly competitive market, the goods offered for sale are all exactly the same. (T)7. The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls. (F)8. The market demand curve shows how the total quantity demanded of a good varies as the income ofbuyers varies, while all the other factors that affect how much consumers want to buy are held constant. (F)9. If something happens to alter the quantity demanded at any given price, then the demand curve shifts. (T)10. If the demand for a good falls when income falls, then the good is called an inferior good. (F)11. A decrease in income will shift the demand curve for an inferior good to the right. (T)12. An increase in the price of a substitute good will shift the demand curve for a good to the right. (T)13. A decrease in the price of a complement will shift the demand curve for a good to the left. (F)14. If a person expects the price of socks to increase next month, then that person’s current demand for socks will increase. (T)15. A decrease in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way. (F)16. Whenever a determinant of demand other than price changes, the demand curve shifts. (T)17. The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price. (T)18. When the price of a good is high, selling the good is profitable, and so the quantity supplied is large. (T)19. If something happens to alter the quantity supplied at any given price, then we move along the fixed supply curve to a new quantity supplied. (F)20. A decrease in supply shifts the supply curve to the left. (T)21. A reduction in an input price will cause a change in quantity supplied, but not a change in supply.(F)22. If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left. (F)23. When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now. (F)24. When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity supplied. (F)25. Price will rise to eliminate a surplus. (F)26. Sellers respond to a shortage by cutting their prices. (F)27. A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price. (T)28. In a market, the price of any good adjusts until quantity demanded equals quantity supplied. (T)29. A decrease in demand will cause a decrease in price, which will cause a decrease in supply. (F) SHORT ANSWER1.a. What is the difference between a "change in demand" and a "change in quantity demanded?"Graph your answer.b.For each of the following changes, determine whether there will be a change in quantitydemanded or a change in demand.i. a change in the price of a related goodii. a change in tastesiii. a change in the number of buyersiv. a change in pricev. a change in consumer expectationsvi. a change in incomea. A change in demand refers to a shift of the demand curve. A change in quantitydemanded refers to a movement along a fixed demand curve.b. A change in price causes a change in quantity demanded. All of the other changes listedshift the demand curve.A change in quantity supplied A change in supply2.Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and equilibrium quantity would change.a.Winter starts and the weather turns sharply colder.b.The price of tea, a substitute for hot chocolate, falls.c.The price of cocoa beans decreases.d.The price of whipped cream falls.e. A better method of harvesting cocoa beans is introduced.f.The Surgeon General of the U.S. announces that hot chocolate cures acne.g.Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.h.Consumer income falls because of a recession, and hot chocolate is considered a normalgood.i.Producers expect the price of hot chocolate to increase next month.j.Currently, the price of hot chocolate is $0.50 per cup above equilibrium.(a) (b)(c) (d) (e) (f)(g) (h)(i) (j)In (j), a price above equilibrium will affect both quantity demanded and quantity supplied and will cause a surplus in the market. It will not cause either demand or supply to shift.3.Fill in the table below, showing whether equilibrium price and equilibrium quantity go up, go down, stay the same, or change ambiguously.CHOICE1. Which of the following is an example of a market? (d)a. a gas stationb. a garage salec. a barber shopd.All of the above are examples of markets. (d)2. In a competitive market, the price of a producta.is determined by buyers and the quantity of the product produced is determined bysellers.b.is determined by sellers and the quantity of the product produced is determined bybuyers.c.and the quantity of the product produced are both determined by sellers.d.None of the above is correct.3. A downward-sloping demand curve illustrates (d)a.that demand decreases over time.b.that prices fall over time.c.the relationship between income and quantity demanded.d.the law of demand.4. Refer to Table 4-1. Whose demand does not obey the law of demand? (c)a.Aaron’sb.Angela’sc.Austin’sd.Alyssa’s5. Refer to Table 4-1. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is (d)a. 4 units.b.7.75 units.c.14 units.d.31 units.6. When we move along a given demand curve, (c)a.only price is held constant.b.income and price are held constant.c.all nonprice determinants of demand are held constant.d.all determinants of quantity demanded are held constant.7. Which of the following is not held constant in a supply schedule? (c)a.technologyb.the price of the goodc.the prices of inputsd.expectations8. A market supply curve is determined by (b)a.vertically summing individual supply curves.b.horizontally summing individual supply curves.c.finding the average quantity supplied by sellers at each possible price.d.finding the average price at which sellers are willing and able to sell a particular quantityof the good.9. A decrease in quantity supplied (a)a.results in a movement downward and to the left along a fixed supply curve.b.results in a movement upward and to the right along a fixed supply curve.c.shifts the supply curve to the left.d.shifts the supply curve to the right.10. Another term for equilibrium price is (b)a.dynamic price.b.market-clearing price.c.quantity-defining price.d.balance price.11. If, at the current price, there is a surplus of a good, then (a)a.sellers are producing more than buyers wish to buy.b.the market must be in equilibrium.c.the price is below the equilibrium price.d.quantity demanded equals quantity supplied.12. If a shortage exists in a market, then we know that the actual price is (c)a.above the equilibrium price and quantity supplied is greater than quantity demanded.b.above the equilibrium price and quantity demanded is greater than quantity supplied.c.below the equilibrium price and quantity demanded is greater than quantity supplied.d.below the equilibrium price and quantity supplied is greater than quantity demanded.13. If the demand for a product increases, then we would expect (c)a.equilibrium price to increase and equilibrium quantity to decrease.b.equilibrium price to decrease and equilibrium quantity to increase.c.equilibrium price and equilibrium quantity both to increase.d.equilibrium price and equilibrium quantity both to decrease.14. If the supply of a product decreases, then we would expect (a)a.equilibrium price to increase and equilibrium quantity to decrease.b.equilibrium price to decrease and equilibrium quantity to increase.c.equilibrium price and equilibrium quantity both to increase.d.equilibrium price and equilibrium quantity both to decrease.15. When supply and demand both increase, equilibrium (d)a.price will increase.b.price will decrease.c.quantity may increase, decrease, or remain unchanged.d.price may increase, decrease, or remain unchanged.16. What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? (a)a.Price would fall and the effect on quantity would be ambiguous.b.Price would rise and the effect on quantity would be ambiguous.c.Quantity would fall and the effect on price would be ambiguous.d.Quantity would rise and the effect on price would be ambiguous.17. Which of these statements does not apply to market economies? (c)a.Prices prevent decentralized decision making from degenerating into chaos.b.Prices coordinate the actions of millions of people with varying abilities and desires.c.Prices ensure that anyone who wants a product can get it.d.Prices ensure that what needs to get done does in fact get done.Chapter 5Elasticity and its Its ApplicationTRUE OR FALSE1. The demand for bread is likely to be more elastic than the demand for solid-gold bread plates. (F)2. In general, demand curves for luxuries tend to be price elastic. (T)3. Goods with close substitutes tend to have more elastic demands than do goods without close substitutes. (T)4. The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years. (F)5. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. (T)6. Demand is inelastic if the price elasticity of demand is greater than 1. (F)7. Price elasticity of demand along a linear, downward-sloping demand curve increases as price falls.(F)8. If the price elasticity of demand is equal to 1, then demand is unit elastic. (T)9. When demand is inelastic, a decrease in price increases total revenue. (F)10. The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income. (T)11. Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand. (F)12. If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes. (T)13. If the cross-price elasticity of demand for two goods is negative, then the two goods are complements. (T)14. Price elasticity of supply measures how much the quantity supplied responds to changes in the price. (T)15. Supply and demand both tend to be more elastic in the long run and more inelastic in the short run. (T)16. If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%. (T)17. If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity. (T)18. A government program that reduces land under cultivation hurts farmers but helps consumers. (F)19. OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run. (T)20. Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic. (F)Short Answer1. Using the midpoint method, compute the elasticity of demand between points A and B. Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded. Now compute the elasticity of demand between points B and C. Is demand along this portion of the curve elastic or inelastic?。

Chapter 3Interdependence and the Gains from TradeTRUE/FALSE1. In most countries today, many goods and services consumed are imported from abroad, and many goods andservices produced are exported to foreign customers.ANS: T DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Definitional2. Interdependence among individuals and interdependence among nations are both based on the gains fromtrade.ANS: T DIF: 2 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive3. If a person chooses self-sufficiency, then she can only consume what she produces.ANS: T DIF: 1 REF: 3-1NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Self-sufficiency MSC: Definitional4. If Wrex can produce more math problems per hour and more book reports per hour than Maxine can, thenWrex cannot gain from trading math problems and book reports with Maxine.ANS: F DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative5. It is possible for the U.S. to gain from trade with Germany even if it takes U.S. workers fewer hours toproduce every good than it takes German workers.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative6. A production possibilities frontier is a graph that shows the combination of outputs that an economy shouldproduce.ANS: F DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive7. Production possibilities frontiers cannot be used to illustrate tradeoffs.ANS: F DIF: 1 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Definitional8. An economy can produce at any point on or inside its production possibilities frontier, but it cannot produce atpoints outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive9. Trade allows a country to consume outside its production possibilities frontier.ANS: T DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier | Trade MSC: Interpretive10. Opportunity cost refers to how many inputs a producer requires to produce a good.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Definitional128Chapter 3 /Interdependence and the Gains from Trade 129 11. Opportunity cost measures the trade-off between two goods that each producer faces.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Definitional12. For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunitycost of the other good.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Interpretive13. Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost toHenry of making a bird house is 1/3 bird feeder.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative14. Suppose that in one hour Dewey can produce either 10 bushels of corn or 20 yards of cloth. Then Dewey’sopportunity cost of producing one bushel of corn is 1/2 yard of cloth.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative15. Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can completean oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative16. Harry is a computer company executive, earning $200 per hour managing the company and promoting itsproducts. His daughter Quinn is a high school student, earning $6 per hour helping her grandmother on the farm. Harry's computer is broken. He can repair it himself in one hour. Quinn can repair it in 10 hours.Harry’s opportunity cost of repairing the computer is lower than Quinn’s.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity costTOP: Opportunity cost MSC: Applicative17. If one producer has the absolute advantage in the production of all goods, then that same producer will havethe comparative advantage in the production of all goods as well.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive18. If a country has the comparative advantage in producing a product, then that country must also have theabsolute advantage in producing that product.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive19. In an economy consisting of two people producing two goods, it is possible for one person to have theabsolute advantage and the comparative advantage in both goods.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Interpretive20. If one producer is able to produce a good at a lower opportunity cost than some other producer, then theproducer with the lower opportunity cost is said to have an absolute advantage in the production of that good. ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Definitional130 Chapter 3 /Interdependence and the Gains from Trade21. Unless two people who are producing two goods have exactly the same opportunity costs, then one person willhave a comparative advantage in one good, and the other person will have a comparative advantage in the other good.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Interpretive22. Zora can produce 4 quilts in a week and she can produce 1 corporate website in a week. Lou can produce 9quilts in a week and he can produce 2 corporate websites in a week. Zora has the comparative advantage in quilts and the absolute advantage in neither good, while Lou has the comparative advantage in corporatewebsites and the absolute advantage in both goods.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Applicative23. Timmy can edit 2 pages in one minute and he can type 80 words in one minute. Olivia can edit 1 page in oneminute and she can type 100 words in one minute. Timmy has an absolute advantage and a comparativeadvantage in editing, while Olivia has an absolute advantage and a comparative advantage in typing.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage MSC: Applicative24. Suppose Hank and Tony can both produce corn. If Hank’s opportunity cost of producing a bushel of corn is2 bushels of soybeans and Tony’s opportunity cos t of producing a bushel of corn is3 bushels of soybeans,then Hank has the comparative advantage in the production of corn.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Applicative25. It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Specialization MSC: Applicative26. The principle of comparative advantage states that, regardless of the price at which trade takes place, everyonewill benefit from trade if they specialize in the production of the good for which they have a comparativeadvantage.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Comparative advantage MSC: Interpretive27. The gains from specialization and trade are based on absolute advantage.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional28. Trade can benefit everyone in society because it allows people to specialize in activities in which they have acomparative advantage.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional29. Two countries can achieve gains from trade even if one country has an absolute advantage in the production ofboth goods.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: InterpretiveChapter 3 /Interdependence and the Gains from Trade 131 30. It takes Ross 6 hours to produce a bushel of corn and 2 hours to wash and polish a car. It takes Courtney 6hours to produce a bushel of corn and 1 hour to wash and polish a car. Courtney and Ross cannot gain from specialization and trade, since it takes each of them 6 hours to produce 1 bushel of corn.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative31. Differences in opportunity cost allow for gains from trade.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive32. As long as two people have different opportunity costs, each can gain from trade with the other, since tradeallows each person to obtain a good at a price lower than his or her opportunity cost.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive33. Trade allows a person to obtain goods at prices that are less than that person's opportunity cost because eachperson specializes in the activity for which he or she has the lower opportunity cost.ANS: T DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive34. When each person specializes in producing the good in which he or she has a comparative advantage, eachperson can gain from trade but total production in the economy is unchanged.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive35. For both parties to gain from trade, the price at which they trade must lie exactly in the middle of the twoopportunity costs.ANS: F DIF: 2 REF: 3-2NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive36. Adam Smith was the author of the 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional37. David Ricardo was the author of the 1817 book Principles of Political Economy and Taxation.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional38. Adam Smith wrote that a person should never attempt to make at home what it will cost him more to makethan to buy.ANS: T DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists MSC: Definitional39. Adam Smith developed the theory of comparative advantage as we know it today.ANS: F DIF: 1 REF: 3-2NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Economists | Comparative advantage MSC: Definitional132 Chapter 3 /Interdependence and the Gains from Trade40. Goods produced abroad and sold domestically are called exports and goods produced domestically and soldabroad are called imports.ANS: F DIF: 1 REF: 3-3NAT: Analytic LOC: The study of economics and definitions of economicsTOP: Exports | Imports MSC: Definitional41. International trade may make some individuals in a nation better off, while other individuals are made worseoff.ANS: T DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive42. For international trade to benefit a country, it must benefit all citizens of that country.ANS: F DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive43. Some countries win in international trade, while other countries lose.ANS: F DIF: 2 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive44. Trade can make some individuals worse off, even as it makes the country as a whole better off.ANS: T DIF: 1 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Definitional45. Trade allows all countries to achieve greater prosperity.ANS: T DIF: 1 REF: 3-3NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: DefinitionalSHORT ANSWER1. Explain the difference between absolute advantage and comparative advantage. Which is more important indetermining trade patterns, absolute advantage or comparative advantage? Why?ANS:Absolute advantage refers to productivity, as in the producer who can produce a product at a lower cost in terms of the resources used in production. Comparative advantage refers to the producer who can produce a product at a lower opportunity cost. Comparative advantage is the principle upon which trade patterns are based. Comparative advantage is based on opportunity cost, and opportunity cost measures the real cost to an individual or country of producing a particular product. Opportunity cost is therefore the information necessary for an individual or nation to determine whether to produce a good or buy it from someone else.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and tradeTOP: Absolute advantage | Comparative advantage | Trade MSC: InterpretiveChapter 3 /Interdependence and the Gains from Trade133 2.The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers. Alpha’s Production Possibilities FrontierOmega’s Production Possibilities Frontier 255075100125150175200225250255075100125150175200225250275300popcorn255075100125150175200225255075100125150175200225250275300popcorna. Assume that each country decides to use half of its resources in the production of each good.Show these points on the graphs for each country as point A.b. If these countries choose not to trade, what would be the total world production of popcorn andpeanuts?c. Now suppose that each country decides to specialize in the good in which each has acomparative advantage. By specializing, what is the total world production of each product now?d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on thegraphs the gain each country would receive from trade. Label these points B.ANS: Alpha’s Production Possibilities Frontier Omega’s Production Possibilities Frontier A B Consumption with trade 255075100125150175200225250255075100125150175200225250275300popcorn A B Consumption with trade 255075100125150175200225255075100125150175200225250275300popcorn134 Chapter 3 /Interdependence and the Gains from Tradea.Alpha would be producing 125 units of peanuts and 75 units of popcorn (point A on its productionpossibilities frontier) and Omega would be producing 50 units of peanuts and 150 units of popcorn(point A on its production possibilities frontier).b.The total world production of peanuts would be 175 units and the total world production of popcornwould be 225 units.c.The total world production of peanuts would now be 250 units and the total world production ofpopcorn would now be 300 units.d.Alpha would be producing 250 units of peanuts and would trade 100 of them to Omega, leavingAlpha with 150 units of peanuts. Alpha would then receive 100 units of popcorn from Omega.Omega would be producing 300 units of popcorn and would trade 100 of them to Alpha, leavingOmega with 200 units of popcorn. Omega would then receive 100 units of peanuts from Alpha.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and tradeTOP: Production possibilities frontier | Gains from trade MSC: Applicative3. Julia can fix a meal in 1 hour, and her opportunity cost of one hour is $50. Jacque can fix the same kind ofmeal in 2 hours, and his opportunity cost of one hour is $20. Will both Julia and Jacque be better off if she pays him $45 per meal to fix her meals? Explain.ANS:Since Julia's opportunity cost of preparing a meal is $50, and Jacque's opportunity cost of preparing a meal is $40, each of them will be better off by $5 per meal if this arrangement is made.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and trade TOP: Gains from tradeMSC: Applicative4. Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they mustdo a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.a.How much time would it take the two to complete the project if they divide the calculations equally andthe slides equally?b.How much time would it take the two to complete the project if they use comparative advantage andspecialize in calculating or preparing slides?c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for eachto specialize in calculating or preparing slides?ANS:a.If both tasks are divided equally, it will take 11 hours for the calculations and 15 hours for the writing,for a total of 26 hours.b.If Diane specializes in calculating and Gary specializes in preparing slides, it will take 22 hours tocomplete the project.c.If Diane specializes in calculating, her opportunity cost will be $60; hence, Diane would be better off ifshe paid Gary any amount less than $60 to do the calculating. Since Gary's opportunity cost of doing thecalculations is only $50, he would be better off if Diane paid him between $50 and $60 dollars to do thecalculations. In this case, the total time spent on the project would be 20 hours.DIF: 2 REF: 3-2 NAT: AnalyticLOC: Gains from trade, specialization and trade TOP: Gains from tradeMSC: ApplicativeChapter 3 /Interdependence and the Gains from Trade 135 Sec00 - Interdependence and the Gains from TradeMULTIPLE CHOICE1. People who provide you with goods and servicesa.are acting out of generosity.b.do so because they get something in return.c.have chosen not to become interdependent.d.are required to do so by the government.ANS: B DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Definitional2. When an economist points out that you and millions of other people are interdependent, he or she is referringto the fact that we alla.rely upon the government to provide us with the basic necessities of life.b.rely upon one another for the goods and services we consume.c.have similar tastes and abilities.d.are concerned about one another’s well-being.ANS: B DIF: 1 REF: 3-0NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Interdependence MSC: DefinitionalSec01 - Interdependence and the Gains from Trade - A Parable for the Modern EconomyMULTIPLE CHOICE1. Which of the following is not a reason people choose to depend on others for goods and services?a.to improve their livesb.to allow them to enjoy a greater variety of goods and servicesc.to consume more of each good without working any more hoursd.to allow people to produce outside their production possibilities frontiersANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Trade MSC: Interpretive2. When can two countries gain from trading two goods?a.when the first country can only produce the first good and the second country can only produce thesecond goodb.when the first country can produce both goods, but can only produce the second good at great cost,and the second country can produce both goods, but can only produce the first good at great costc.when the first country is better at producing both goods and the second country is worse atproducing both goodsd.Two countries could gain from trading two goods under all of the above conditions.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Interpretive3. Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, butRegan is better at producing both goods. In this case, trade coulda.benefit both Jayson and Regan.b.benefit Jayson, but not Regan.c.benefit Regan, but not Jayson.d.benefit neither Jayson nor Regan.ANS: A DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative136 Chapter 3 /Interdependence and the Gains from Trade4. Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. Inwhich of the following cases is it impossible for both Ben and Shawna to benefit from trade?a.Ben cannot knit sweaters and Shawna cannot bake bread.b.Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters.c.Ben is better than Shawna at baking bread and at knitting sweaters.d.Both Ben and Shawna can benefit from trade in all of the above cases.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative5. Shannon bakes cookies and Justin grows vegetables. In which of the following cases is it impossible for bothShannon and Justin to benefit from trade?a.Shannon does not like vegetables and Justin does not like cookies.b.Shannon is better than Justin at baking cookies and Justin is better than Shannon at growingvegetables.c.Justin is better than Shannon at baking cookies and at growing vegetables.d.Both Shannon and Justin can benefit from trade in all of the above cases.ANS: A DIF: 2 REF: 3-1NAT: Analytic LOC: Gains from trade, specialization and tradeTOP: Gains from trade MSC: Applicative6. The production possibilities frontier illustratesa.the combinations of output that an economy should produce.b.the combinations of output that an economy should consume.c.the combinations of output that an economy can produce.d.All of the above are correct.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive7. An economy’s production possibilities frontier is also its consumption possibilities frontiera.under all circumstances.b.under no circumstances.c.when the economy is self-sufficient.d.when the rate of tradeoff between the two goods being produced is constant.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive8. A production possibilities frontier is bowed outward whena.the more resources the economy uses to produce one good, the fewer resources it has available toproduce the other good.b.an economy is self-sufficient instead of interdependent and engaged in trade.c.the rate of tradeoff between the two goods being produced is constant.d.the rate of tradeoff between the two goods being produced depends on how much of each good isbeing produced.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: InterpretiveChapter 3 /Interdependence and the Gains from Trade 1379. A production possibilities frontier is a straight line whena.the more resources the economy uses to produce one good, the fewer resources it has available toproduce the other good.b.an economy is interdependent and engaged in trade instead of self-sufficient.c.the rate of tradeoff between the two goods being produced is constant.d.the rate of tradeoff between the two goods being produced depends on how much of each good isbeing produced.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Interpretive10. The following table contains some production possibilities for an economy for a given month.Sweaters Gloves43006?8100If the production possibilities frontier is bowed outward, then “?” could bea.100.b.150.c.200.d.250.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative11. The following table contains some production possibilities for an economy for a given month.Sweaters Gloves43006?8100If the production possibilities frontier is a straight line, then “?” must bea.100.b.150.c.200.d.250.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative12. The following table contains some production possibilities for an economy for a given year.Cars Newspapers104001236014?If the production possibilities frontier is bowed outward, then “?” could bea.340.b.330.c.320.d.310.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative13. The following table contains some production possibilities for an economy for a given year.Cars Newspapers104001236014?If the production possibilities frontier is a straight line, then “?” must bea.340.b.330.c.320.d.310.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative14. The following table contains some production possibilities for an economy for a given month.Bagels Donuts4015060?8050If the production possibilities frontier is bowed outward, then “?” could bea.50.b.75.c.100.d.125.ANS: D DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative15. The following table contains some production possibilities for an economy for a given month.Bagels Donuts4015060?8050If the production possibilities frontier is a straight line, then “?” must bea.50.b.75.c.100.d.125.ANS: C DIF: 2 REF: 3-1NAT: Analytic LOC: Understanding and applying economic modelsTOP: Production possibilities frontier MSC: Applicative。

曼昆经济学原理微观名词解释CHAPER2-4（中英版）CHAPTER 2Thinking Like an EconomistCircular-flow diagram: a visual model of the economy that shows how dollars flow through markets among households and firms循环流量图：一个说明货币如何通过市场在家庭与企业之间流动的直观经济模型。

Production possibilities frontier: a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology生产可能性边界：表示在可得到的生产要素与生产技术既定时，一个经济所能生产的产品数量的各种组合的图形。

Microeconomics: the study of how house- holds and firms make decisions and how they interact in markets微观经济学：研究家庭与企业如何做出决策，以及它们如何在市场上相互交易的学科Macroeconomics: the study of economy-wide phenomena, including inflation, unemployment, and economic growth宏观经济学：研究整体经济现象，包括通货膨胀，失业和经济增长的学科。

Positive statements: claims that attempt to describe the world as it is实证表述：试图描述世界是什么样子的观点。

Syllabus for MicroeconomicsThe Nature of the Course：Specialized required courseSuitable Specialty: International economy and trade Marketing AccountingInformation Management and Systems Business AdministrationFinancial AdministrationCredit： 4Class Hours：64Authors：yijun liu ling langT he Purpose and Tasks of the CourseThis course is a basic professional course for undergraduate in the School of Business and Management. Through this course, students have a more comprehensive understanding of basic issues and basic viewpoints on the microeconomics. They can grasp the basic concepts of microeconomics, the basic idea, the basic analytical methods and basic theory as well. More important, lay ing a theoretical foundation for the further study of other professional courses.The Basic Requirements of the Course1．Require students to grasp the basic concept, the basic thought, the basic analysis method and the elementary theory of microeconomics.2．Require students to conduct self-study, and students are encouraged to widely read reference books to make it more understanding of basic economic theory and its application in all respects.3．Require teachers to pay close attention to using graphic tools and using mathematical tools properly.4．The advance curriculum is the higher mathematics.Outline the Content and Hours Allocation Recommendations Chapter 1Introduction 6 Class Hours §1 Ten Principles of Economics1.How People Make Decisions2. How People Interact3.How the Economy as a Whole Works§2 Thinking Like an Economist1.The Economist as a Scientist2. The Economist as a Policy Adviser3.Why Economist Disagree§3 the Using of Graphs in Economics （#）1.Graphic Drawing and Graphics Type in Economic Analysis2.Slope and Elasticity3. Note for Graphics Use in Economic Analysis§4 Interdependence and the Gains from Trade1.The Production Possibilities Frontier、Specialization and Tradeparative Advantage3.Applications of Comparative AdvantageChapter 2Supply and Demand（Ⅰ）：How Markets Work 8 Class Hours §1Markets and Competitionpetitive Market2.Other Markets§2 law of demand1.Demand and the Demand Curve2.Shifts in the Demand Curve and Shift of the Demand Curve3.Market Demand and Individual Demand§3 law of supply （#）1. Supply and the Supply Curve2. Shifts in the Supply Curve and Shift of the Supply Curve3.Market Supply and Individual Supply§4 Supply and Demand Model1.The Conditions of Supply and Demand Model2.Supply and Demand Model3.What happens to equilibrium when supply and demand shifts?4.Cobweb Theory （☆）§5Elasticity and The Applications of Elasticity Theory1.the Elasticity of Demand and Its Application2.the Elasticity of Supply and Its Application（#）§6Supply、Demand and Government Policies1.Controls on prices （#）2.How Taxes Affect Market Outcomes3.Can Good News for Farming Be Bad News for Farmers?Exercise classes 2Class Hours Chapter 3 Supply and Demand（Ⅱ）：Market and Welfare 16 Class Hours §1 The Theory of Consumer Choice 4 Class Hours1.Cardinal Utility Theory2. Preference Theory3.Application of The Theory of Consumer Choice§2 The Theory of Producer Choice 6 Class Hours1.The Organization of Production （#）2. Production Function and Factor Inputs3. The Cost Theory§3 Consumer Surplus 2Class Hours1.Willingness to Paying the Demand Curve to Measure Consumer Surplus3.How a Lower Price Raises Consumer Surplus§4 Producer Surplus（#）1.Cost and the Willingness to Sell2. Using the Supply Curve to Measure Producer Surplus3. How a Higher Price Raises Producer Surplus§5 Market Efficiency 2 Class Hours1.The Concept of Efficiency2.The Equilibrium Efficiency of the Competitive Firm(1)3.The conditions of the Efficient Competitive Firm§6 Application：The Cost of Taxation 2 Class Hours1.The Deadweight Loss of Taxation2.The Determinants of the Deadweight Loss3. Deadweight Loss and Tax Revenue as Taxes Vary§7 Application：International Trade （#）1.The Determinants of Trade2.The Winners and Losers from Trade3.The Arguments for Restricting TradeExercise classes 3 Class Hours Discussion class 1 Class Hour Chapter 4The Economics of the Public Sector 4 Class Hours §1 Externalities1.Externalities and Market Inefficiency2.Private Solutions to Externalities3.Public Policies toward Externalities§2 Public Goods and Common Resources1.The Different Kinds of Goods2.Public Goodsmon Resources§3 The Design of the Tax System（#）1.Taxes and Efficiency2.Taxes and EquityChapter 5 Supply and Demand（Ⅲ）：Enterprise behavior and industrial organization8 Class Hours§1Types of Market （#）§2 Firms in Competitive Markets 4 Class Hours1. The Demand Curve and Revenue Curve of the Competitive Firm2. The Short-run Decision and the Supply Curve of the Competitive Firm3. The Short-run Supply Curve of the Competitive Market4.The Competitive Firm's Long-run Decision5.The Long-run Supply Curve of the Competitive Firm6.The Equilibrium Efficiency of the Competitive Firm(2)§3 Monopoly 4 Class Hours1.Why Monopolies Arise2.The Demand Curve and Revenue Curve of the Monopolistic Firm3.The Monopolistic Firm's Short-run and Long-run Decision4.The Welfare Cost of Monopoly5.Public Policy toward Monopolies6.Price Discrimination§4 Oligopoly （#）1.Markets with Only a few Sellers2.Game Theory and the Economics of Cooperation3.Public Policy toward Oligopolies§5 Monopolistic Competition（#）1.The Demand Curve and Revenue Curve of The MonopolisticCompetitive Firm2. The Monopolistic Competitive Firm in the Short-run and Long-run3. Monopolistic Competition and the Welfare of Society4.AdvertisingExercise classes 1 Class Hour Discussion class 1 Class Hour Chapter 6 Supply and Demand（Ⅳ）：The Markets for the factors of production6 Class Hours§1 How Markets Determine Incomes1. Income and Wealth （#）2. Marginal Productivity Determines the Prices of Inputs§2 The Economics of Labor Market1.The Demand and Supply for Labor （#）2.Equilibrium in the Labor Market （#）3. Some Determinants of Equilibrium Wages4.The Economics of Discrimination§3 The Land Market and The Capital Marketnd and Rent2.Capital and Interest§4 Income Distribution （#）1.The Measurement of Inequality2.The Political Philosophy of Redistributing Income3.Policies to Reduce PovertyDiscussion class 2 Class Hours Chapter 7 Supply and Demand（Ⅴ）：(General equilibrium) Market and Welfare （☆）§1 General equilibrium1.Meaning of the Equilibrium2. The Equilibrium Model of Léon Walras3. The Two-sector Model of General Equilibrium§2 Welfare Economics1.The Social Welfare Function2.Equity and EfficiencyChapter 8Uncertainty and Information （☆）§1 Uncertainty in the Economy1. Uncertainties and Risks2. The Effectiveness of Property3. Measurement of Risk Cost§2 Information, Risk and Markets1. Insurance and Risk-sharing2. Private Information and Market3. Risk Management in the Financial MarketsReview class 2 Class Hours Flexible time 4 Class Hours note：（#）Expressed that students learn these contents on its own, and they are included in the scope of examination.（☆）Expressed that students can choose according to their interest in reading, but not included in the scope of examination.Recommended Teaching Materials and Major Reference Books1．[美]曼昆著，梁小民译，《经济学原理（第5版）》，机械工业出版社，2009年2．[美]保罗·萨缪尔森、威廉·诺德豪斯著，萧琛主译，《经济学（第18版）》，人民邮电出版社，2008年3．刘毅军主编，《经济学基础》，石油工业出版社，2006年。