Macro Ch 14 & A1
The opportunity cost to Moe of grilling hamburgers is____ pounds of french fries. (Round your response to two decimal places.)
0.25 (In contrast, Moe forgoes 20 pounds of french fries for every 80 hamburgers that he grills, or 20/80 = 0.25 forgone pounds of french fries for every hamburger that he grills.)
Suppose that two workers, Joe and Moe, work at a fast-food restaurant. Joe can grill 50 hamburgers per hour or fry 25 pounds of french fries per hour. Moe can grill 80 hamburgers per hour or fry 20 pounds of french fries per hour. Using comparative advantage, determine whether Joe or Moe should grill hamburgers. The opportunity cost to Joe of grilling hamburgers is ___ pounds of french fries. (Round your response to two decimal places.)
0.5 (This implies that Joe forgoes 25 pounds of french fries for every 50 hamburgers that he grills, or 25/50 = 0.50 forgone pounds of french fries for every hamburger that he grills.)
Suppose the world price of Good Z is $40. With the assumption of a perfectly competitive market, the equilibrium price and quantity demanded of Good Z in Sweden is $57.50 and 4.90 million respectively. Once Sweden is open to trade, Swedish producers will curb their production from 4.90 million units of Good Z to 2.60 million units and receive the world price of $40 per unit. At that price, Swedish consumers will demand to 7.40 million units of Good Z. These movements lead to an excess demand of ___million units of Good Z in Sweden. In this case, Sweden is an ___ of Good Z This added demand does not change the world price because ___
4.80 importer Sweden is a small buyer of Good Z
Which of the following nations will be against free trade? (Check all that apply.)
A nation who wants to preserve their cultural uniqueness. A defense-oriented nation. (A nation with national security concerns and a nation who wants to maintain their culture's uniqueness would view globalization as a serious concern. Therefore, such nations will be against free trade.)
Suppose that the East requires 100 units of labor to produce one car and 200 units of labor the produce one bus. Suppose that the West requires 600 units of labor to produce one car and 300 units of labor to produce one bus. Which of the following statements is correct?
Both C. & D. East has an absolute advantage in both cars and buses. Gains from trade for both countries could occur if East specialized in cars and West specialized in buses.
There are two countries, A and B, and they are capable of producing two goods, pizza and beer. Country A: Pizza--> 20/hr Beer--> 24/hr Country B Pizza--> 19/hr Beer--> 65/hr Using the data in the table, calculate the opportunity costs in the table below. (Round your responses to one decimal place.) _____ should produce pizza, and ____ should produce beer.
Country A Pizza-> 1.2 bottles of beer Beer--> .8 pizzas Country B Pizza-> 3.4 bottles of beer Beer-> .29 pizzas Country A; Country B
If there are two countries, A and B, and they are capable of producing two goods, pizza and beer, which of the following is true with regards to absolute advantage? (Check all that apply.)
Country A could have an absolute advantage in the production of pizza and in the production of beer. Neither country could have an absolute advantage in the production of pizza or in the production of beer.
Using the data in the table, which country has an absolute advantage in the production of pizza? Which country has an absolute advantage in the production of beer? Country A Pizza-> 10 pizza/hr Beer-> 72 bottles/hr Country B Pizza-> 25 pizza/hr Beer-> 36 Bottles/hr ___has an absolute advantage in the production of pizza, and____has an absolute advantage in the production of beer.
Country B; Country A
Which of the following is not one of the common arguments against free trade?
Dead weight loss increases, harming society as a whole or Consumers always win at the expense of producers (There are several arguments against free trade: (1) national security concerns, (2) fear of the effects of globalization on a nation's culture, (3) environmental and resource concerns, (4) infant industry arguments, and (5) potential negative effects on local wages and jobs.)
If there are two countries, A and B, and they are capable of producing two goods, pizza and beer, which of the following is true with regards to comparative advantage? (Check all that apply.)
If Country A has a comparative advantage in the production of either pizza or beer, then Country B must have a comparative advantage in the production of the other good. Neither country has a comparative advantage in the production of any of the goods.
in this case ___ has the comparative advantage in grilling hamburgers.
Moe
Tire production in the United States has been on the decline, in both absolute and relative terms. Imported tires are replacing most of the domestically manufactured tires in the market. Trade unions in the United States have claimed that over 7,000 jobs have been lost due to Chinese tire imports. You read a blog post that uses this example to say that this is exactly why countries should not engage in free trade; cheaper imports will flood the domestic market and unemployment in the country will increase. Do you think the blogger's conclusions are entirely correct? (Check all that apply.)
No, because the efficiencies gained from exploiting comparative advantage generate more winners than losers. no, because the winners from free trade could compensate the losers.
When the nation imposes a tariff, the imports of the nation falls to ___ . However, government revenue increases by ___and producer surplus increases by ____ This nation may not favor imposing tariffs on imports because _______
Q2-Q3 area D Area B it raises prices for consumers
What is the problem with the argument that infant industries need to be protected from foreign competition?
Starting a company in isolation may deprive it of "technological spillovers" that its competitors, all located near one another, may enjoy.
You and your roommate are enrolled in the same course: Postmodern Deconstruction of Postmodern Deconstructionism. The course requires a term paper. Since the professor encourages collaboration on the paper, you decide to work on it together, "trading" tasks. In 8 hours, you can type 25 pages, whereas your roommate can only type 15. If you do outlining instead of typing, in the same 8 hours you could produce 12 summary outlines of the course readings, while your roommate could only produce 55. ___the absolute advantage in typing, and ___ the absolute advantage in outlining.
You have; You have;
____should do the typing, and ____should do the outlining. You determined this allocation of tasks on the basis of____
Your roommate; you; comparative advantage
a producer has _____ in producing a good or service if the producer can produce more units per hour than other producers can.
an absolute advantage
Kevin can write 250 textbook pages per year or edit 500 textbook pages per year. Amy can write 120 textbook pages per year or edit 480 textbook pages per year. In this scenario, Kevin has the absolute advantage in___ textbook pages and Amy has the comparative advantage in____textbook pages.
both editing and writing; editing (A producer has an absolute advantage in producing a good or service if the producer can produce more units per hour than other producers can. A producer has a comparative advantage in producing a good or service when the producer has a lower opportunity cost per unit produced compared to other producers.)
A producer ____ have an absolute advantage in all goods and a producer ____ have a comparative advantage in all goods.
can; cannot
Determining who should specialize in what good or service is determined using _____
comparative advantage
a producer has a ______ in producing a good (or service) when the producer has a lower opportunity cost per unit produced compared to other producers.
comparative advantage
One reason economists in general ___ favor protectionism is because it ___ prices for consumers and ____ social surplus
do not raises lowers
National security concerns might cause a nation to:
maintain a variety of agricultural industries.
Comparative advantage is the ability to ____________.
produce a good or service at the lowest opportunity cost per unit than any other producer.
Absolute advantage is the ability to ____________.
produce more of a good or service in a given period of time than any other producer.
Trade allows buyers and sellers to exploit gains from specialization because it allows sellers to ____________.
specialize in the production of the good or service for which they have a comparative advantage and buy goods and services for which they do not have a comparative advantage.
Comparative advantage
the ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other producers.
