producing whiskey.
References
Multiple Choice Difficulty: 2 Medium
The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can
produce when they completely specialize in one or another product. The last two columns give each country's
consumption without trade.
Maximum
beer
production
Maximum
whiskey
production
Beer consumption
without trade
Beer consumption
without trade
Northern Ireland 500 kegs 1500 kegs 300 kegs 600 bottles
Southern Ireland 1200 kegs 800 kegs 600 kegs 400 bottles
Suppose that trade occurs. Each country completely specializes and 500 kegs of beer are traded for 500 bottles of
whiskey. What is the international price of beer?
1 bottle of whiskey = 1 keg of beer
3 bottles of whiskey = 1 keg of beer
2/3 bottle of whiskey = 1 keg of beer
1 bottle of whiskey = 3 kegs of beer
References
Multiple Choice Difficulty: 2 Medium
94.
Award: 1.00 point
95.
Award: 1.00 point
The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can
produce when they completely specialize in one or another product. The last two columns give each country's
consumption without trade.
Maximum
beer
production
Maximum
whiskey
production
Beer consumption
without trade
Beer consumption
without trade
Northern Ireland 500 kegs 1500 kegs 300 kegs 600 bottles
Southern Ireland 1200 kegs 800 kegs 600 kegs 400 bottles
What is the cost of Northern Ireland producing one additional bottle of whiskey?
0.33 kegs of beer
0.66 kegs of beer
1 kegs of beer
3 kegs of beer
It costs Northern Ireland 0.33 (500/1500) kegs of beer to produce one additional unit of whiskey.
References
Multiple Choice Difficulty: 2 Medium
The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can
produce when they completely specialize in one or another product. The last two columns give each country's
consumption without trade.
Maximum
beer
production
Maximum
whiskey
production
Beer consumption
without trade
Beer consumption
without trade
Northern Ireland 500 kegs 1500 kegs 300 kegs 600 bottles
Southern Ireland 1200 kegs 800 kegs 600 kegs 400 bottles
Is Northern Ireland better off when it trades with Southern Ireland?
Yes
No
References
Yes / No Difficulty: 2 Medium
96.
Award: 1.00 point
The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can
produce when they completely specialize in one or another product. The last two columns give each country's
consumption without trade.
Maximum
beer
production
Maximum
whiskey
production
Beer consumption
without trade
Beer consumption
without trade
Northern Ireland 500 kegs 1500 kegs 300 kegs 600 bottles
Southern Ireland 1200 kegs 800 kegs 600 kegs 400 bottles
What is the increased number of goods available in Northern Ireland after trade?
400 more bottles of whiskey and 200 more kegs of beer
1,000 more bottles of whiskey and 500 more kegs of beer
200 more bottles of whiskey and 400 more kegs of beer
300 more bottles of whiskey and 300 more kegs of beer
Northern Ireland (prior to the trade) produces 1,500 bottles of whiskey. They then trade with Southern Ireland and give
away 500 bottles of whiskey for 500 kegs of beer. This leaves them with 1,000 (1,500 − 500) bottles of whiskey and 500
kegs of beer. If they had not traded, they would have been unable to specialize, in which case they would have had 300
kegs of beer and 600 bottles of whiskey. They now have 400 (1,000 − 600) more bottles of whiskey and 200 (500 − 300)
more kegs of beer.
References
Multiple Choice Difficulty: 2 Medium
97.
Award: 1.00 point
98.
Award: 1.00 point
The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can