Chapter 8 Micro

The main role of markets is:

reallocating resources to better uses.

If Italy is said to have an absolute advantage over Mexico in the production of computer chips, this means that, given the same resources,

Italy can produce more computer chips than Mexico.

If Mary can bake a cake at a lower opportunity cost than Sarah can, then:

Mary has a comparative advantage in baking cakes.

Which term best describes the situation that, relative to England, France can produce beef at a lower cost of production (i.e., can produce beef using fewer inputs)?

absolute advantage

You have a comparative advantage if you can complete a task:

at a lower opportunity cost than anyone else.

To get maximum output, you should allocate each task to the person who:

can do the task with the lowest opportunity cost.

You have an absolute advantage in producing a product if you:

can produce the product using the fewest inputs.

Which of the four options best represents specialization and its relationship with trade?

comparative advantage

Specialization will increase output when it is based on:

comparative advantage.

If Bishan wants to capitalize on comparative advantage in his life, then he should:

do more of what he is relatively good at and then trade for other things.