Practice Questions for Experiment 11
THE NEXT THREE QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: Robinson Crusoe
lives alone on a tropical island. He spends 9 hours each day catching fish and
gathering coconuts. For every hour that he spends fishing, he catches 1 fish.
For every hour that he spends gathering coconuts, he finds 2 coconuts. Let F
represent the number of fish he catches per day, and let C represent the number
of coconuts he gathers per day. Robinson always insists on consuming one fish
for every coconut that he eats and one coconut for every fish that he eats.
1. Robinson's production possibility frontier is a line described by which of
the following equations?
a) F+(C/2)=9
b) F+2C=9
c) 2F+C=9
d) F=2C+9
e) C=F
2. If Robinson cannot trade with anybody, how many fish and how many coconuts
should he produce?
a) 9 fish and 0 coconuts.
b) 0 fish and 18 coconuts.
c) 9 fish and 9 coconuts.
d) 6 fish and 6 coconuts.
e) 4 fish and 10 coconuts.
3. Now suppose that Robinson is regularly visited by an itinerant trader who is
willing to trade fish for coconuts or coconuts for fish at the rate of one fish
for each coconut. Under these circumstances, what should Robinson do?
a) Spend all his time fishing and trade 4 of his fish for 4 coconuts.
b) Produce equal numbers of fish and coconuts and not trade with the trader.
c) Catch 3 fish and gather 6 coconuts and trade 3 of his coconuts for 3 fish.
d) Spend all his time gathering coconuts and trade 9 of his coconuts for 9 fish.
e) Spend all his time gathering coconuts and trade 4 of his coconuts for 4 fish.
THE NEXT TWO QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: The small island
nation of Ruritania is populated by two farmers, Alf and Barney. Each farmer
has 100 acres of land. Each acre of land can be used either for growing wheat
or as pasture for beef cattle. Each acre that Alf plants to wheat will yield 50
bushels of wheat per year, and each acre that Alf devotes to pasture will yield
70 pounds of beef per year. Each acre that Barney plants to wheat will yield 25
bushels of wheat per year, and each acre that Barney devotes to pasture will
yield 30 pounds of beef per year.
4. Under these circumstances, which of the following statements is true?
a) Alf has an absolute advantage in the production of beef and a comparative
advantage in the production of wheat.
b) Barney has a comparative advantage in the production of beef.
c) Barney has a comparative advantage in the production of wheat.
d) Alf has a comparative advantage in both beef and wheat.
e) None of the above statements are true.
5. The total amount of beef produced on Ruritania is the sum of the amounts of
beef produced by Alf and by Barney, and the total amount of wheat produced is
the sum of the amounts of wheat produced by Alf and by Barney. A national
production possibility frontier for the island of Ruritania shows the various
combinations of total beef production and total wheat production that can be
achieved when the land is used efficiently. Draw the national production
possibility frontier for Ruritania on a graph that has total wheat production
(W) on the horizontal axis and total beef production (B) on the vertical axis,
and let the notation (W,B) represent points on this graph. Using this notation,
the national production possibility frontier for Ruritania consists of
a) two line segments, one extending from (0,10000) to (2500,7000) and the other
extending from (2500,7000) to (7500,0).
b) a single line segment extending from (0,10000) to (7500,0).
c) two line segments, one extending from (0,3000) to (2500,0) and the other
extending from (0,7000) to (5000,0).
d) two line segments, one extending from (0,10000) to (5000,3000) and the other
extending from (5000,3000) to (7500,0).
e) two line segments, one extending from (0,10000) to (3000,7000) and the other
extending from (3000,7000) to (7500,0).
THE NEXT TWO QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: Ernie and Burt are
the only workers in a small furniture factory that makes tables. A table
consists of a set of table legs and a table top. It takes Ernie 2 hours to make
a set of table legs and 4 hours to make a table top. It takes Burt 1 hour to
make a set of table legs and 1 hour to make a table top. (To keep things
simple, assume that attaching the legs to the table top takes no time at all.)
Ernie and Burt each devote 8 hours per day to the production of tables.
6. Each day, Ernie and Burt seek to maximize the number of completed tables
that they produce. What should they do to accomplish this goal?
a) Ernie should produce table legs only and Burt should produce table tops only.
b) Ernie should spend twice as much time making table tops as table legs and
Burt should spend equal amounts of time making table tops and table legs.
c) Ernie should produce table legs only and Burt should produce some table legs
and some table tops.
d) Ernie should spend equal amounts of time at each activity, and Burt should
also spend equal amounts of time at each activity.
e) Ernie should spend some time producing table tops and some time producing
table legs and Burt should specialize in table tops.
7. What is the maximum number of completed tables that Ernie and Burt can
produce each day?
a) 4
b) 5
c) 6
d) 7
e) 8
8. Max and Einar are going to spend the day hunting for frogs and lizards,
items that are of great value to them. In a day of hunting, Max can catch
either 8 frogs or 4 lizards. In the same amount of time, Einar can catch either
32 frogs or 8 lizards. For either boy, the number of frogs and lizards that
they catch is proportional to the amount of time that they devote to each task.
Which of the following trading arrangements will make both Max and Einar better
off than they would be without trading?
a) Max should hunt frogs, Einar should hunt lizards, and Max should sell frogs
to Einar at a price of 1 lizard for 4 frogs.
b) Max should hunt frogs, Einar should hunt lizards, and Max should sell frogs
to Einar at a price of 1 lizard for 2 frogs.
c) Max should hunt lizards, Einar should hunt frogs, and Max should sell lizards
to Einar at a price of 5 frogs for 1 lizard.
d) Max should hunt lizards, Einar should hunt frogs, and Max should sell lizards
to Einar at a price of 3 frogs for 1 lizard.
e) It is impossible for Max and Einar to better themselves by trading.
Correct Answers:
1. a
2. d
3. d
4. c
5. a
6. c
7. c
8. d