Chapter 5 econ

At the point at which it is currently producing, Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is ________ sweaters.

1

France and England both produce wine and cloth under conditions of constant opportunity costs. France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. Using this information, we can conclude that:

England has a comparative advantage in cloth production.

(Figure 2) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. If neither city trades, Jackson produces and consumes 30 head of cattle and 80 barrels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. With complete specialization according to comparative advantage, the two nations' production of wheat will:

increase by 60 bushels.

Use the following to answer questions 2-4: Scenario 1 In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips If the two countries do not engage in trade, the price of beef:

is lower in the Netherlands than in Belgium.

Scenario 1 In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips From this information, we know that:

the Netherlands has a comparative advantage in raising beef.

(Table: The Production Possibilities for Cars and Leather Boots) Look at the table The Production Possibilities for Cars and Leather Boots. Given the opportunity costs of production:

there is no basis for trade.

(Scenario: Production of Wheat and Toys) Given the information provided in this scenario, one can determine that country A has an absolute advantage in ________ and a comparative advantage in the production of ________.

wheat and toys; wheat

(Figure 2) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. Jackson has an absolute advantage in producing

wheat only.

(Figure 2) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. Based on the information in the graphs:

Jackson has a comparative advantage in the production of wheat.

If the United States can produce 30 computers for every car it produces and Japan can produce 15 computers for every car it produces, we can conclude that:

Japan has the comparative advantage in car production.