Economics Ch 2

If Cathy has an absolute advantage over Reid in cooking dinner, then

Cathy can cook dinner in less time than Reid

The idea that because resources are limited, having more of one thing generally means having less of another is captured by the fact that the

production possibility curve is downward sloping.

On the graph of a PPC curve, the opportunity cost of the good on the horizontal axis is determined by

the absolute value of the slope of the possible production curve (PPC).

What can affect a country's comparative advantage?

The country's climate, natural resources, culture and institutions.

Any combo of good that can be produced using the currently available resources is known as an

attainable point

Amber takes 15 minutes to make a pot of coffee and 30 minutes to make a loaf of banana bread. What is Amber's opportunity cost of making a pot of coffee?

1/2 of a loaf of banana bread

True or false: A person's comparative advantage can never change

False -- can change with experience and education

A graph that describes the maximum amount of one good that can be produced for every possible production level of the other good is a _____________.

Production Possibilities Curve

If it takes a person less time to perform a task than anyone else, then that person has a(n) ___________ advantage in performing that task.

absolute

Joe and Rachel are roommates. Rachel takes 10 minutes to do the dishes, and Joe takes 15 minutes to do the dishes. So, we know that Rachel has a(n) ____________ advantage in washing the dishes.

absolute

If Tom's opportunity cost of performing a task is lower than Jerry's, then Tom has a(n) ____________ advantage over Jerry in performing that task

comparative

Everyone can be made better off if each person specializes in performing the task at with he or she has a(n)

comparative advantage

Jake and Kate are stranded on a remote island and eat fish and coconuts to stay alive. For Kate, the opportunity cost of catching a fish is 8 coconuts. For Jack the opportunity cost of catching a fish is 5 coconuts, Thus, we know that Jack has a ____________ over Kate.

comparative advantage

Suppose Tom and Ray are auto mechanics. If we want to know which one has a comparative advantage in performing oil changes, then we would want to know

which one has the lowest opportunity cost of performing an oil change.