Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following question:  Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hamburger? Why or why not?

In one month, Manal can knit 2 sweaters or 4 scarves. In one month, Tamara can knit 1 sweater or 3 scarves. Given this information, which of the following statements is TRUE? O Manal has a comparative advantage in knitting scarves but not in knitting sweaters O Manal has a comparative advantage in knitting neither sweaters nor scarves O Manal has a comparative advantage in knitting both sweaters and scarves O Manal has a comparative advantage in knitting sweaters but not in knitting scarves

Consider the following dialogue between two economics students, Janet and Larry, after a recent economics lecture.   JANET: Hi Larry. Today the professor said that money is helpful because systems of exchange work better when everyone agrees to use a single common item to buy and sell things. But I don’t see how money is useful. As long as I specialize in something I have a comparative advantage in, like making cookies, I should be able to trade my cookies for whatever I need! I wouldn't need money!   LARRY: Okay, I see where you are confused. Let’s run through it one more time. Suppose there is no money and you continue your job making cookies. With no money, you will actually have to be paid in cookies. Now, you still need water to survive, right? Well, in order to get water, you'll need to pay the water company your _______ (options: cookies, water, cash) in exchange for the water company's _________ (options: cash, cookies, water).  JANET: Yes. So what’s wrong with that?…

READ THOROUGHLY! Molly is Person A; John is person B 2 people from the same house do two things: they give rides and deliver meals  Molly can provide 4 taxi rides or 2 meal deliveries in an hour. John can provide 5 taxi rides or 4 meal deliveries in an hour. Who has the absolute advantage in the provision of taxi rides? Who has the comparative advantage in the provision of taxi rides? Absolute advantage: Person A Comparative advantage: Person A Absolute advantage: Person B Comparative advantage: Person A Absolute advantage: Person A Comparative advantage: Person B Absolute advantage: Person B Comparative advantage: Person B What is a price of taxi rides (in terms of meal deliveries) at which BOTH Molly and John will be better o" by specialization and trade?

Carlos takes 2 hours to pick a box of apples and 1 hour to make an apple pie. Son takes 4 hours to pick a box of apples and 4 hours to make an apple pie. Which of the following statements is NOT true?   Carlos’s opportunity cost of making an apple pie is lower than that of Son.   Carlos has a comparative advantage in making an apple pie.   Son will specialize in picking apples to generate gains from trade.   Son has an absolute advantage in picking apples.

Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. Germany France Wine (Bottles) Cheese (Pounds) 0 1 2 3 4 8 6 4 2 0 Wine (Bottles) 0 1 2 3 4 5 Cheese (Pounds) 20 16 12 8 4 0 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? O A. Germany has a comparative advantage producing wine and cheese. OB. Neither has a comparative advantage producing wine or cheese. O C. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. France has a comparative advantage producing wine and cheese. O D. O E. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. Suppose that France is currently producing 1 bottle of wine and 6 pounds of cheese and Germany is currently producing 3 bottles of wine and 8 pounds of cheese. Then, assume instead that…

Consider two neighboring island countries called Contente and Felicidad. They each have 4 million labor hours available per month that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Jeans Rye Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 12 24 Felicidad 8 32 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Contente produces 12 million pairs of jeans and 72 million bushels of rye, and Felicidad produces 24 million pairs of jeans and 32 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.…