HW2 Intro, specialization and trade

1/3

(Figure: PPF Nickel & Textiles) Refer to the figure. How many tons of textiles does Australia give up to produce one ton of nickel?

8 tons

(Figure: PPF Nickel & Textiles) Refer to the figure. What is the maximum amount of nickel China can produce?

beans, tea

(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, Kenya should produce ________ and Sri Lanka should produce __________.

2 teas, 3 teas

(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, Kenya's opportunity cost of producing beans is ________, while Sri Lanka's opportunity cost of producing beans is _________.

One learns to be very good at paddling and one learns to be very good at hunting; this is an example of specialization and division of knowledge.

A rock carving from ancient Norway depicts two identical people doing different jobs in the same boat: one uses a bow to hunt while the other paddles. How does this early example illustrate the benefits of trade?

constant opportunity cost

A straight-line production possibilities frontier represents

the lowest cost of production

Absolute advantage derives from which of the following?

A method of resource allocation

An "economy" is:

opportunity cost

Comparative advantage is determined by which of the following?

Firms own all of the factors of production.

Which of the following is NOT true regarding the circular flow model of a market economy?

It is virtually impossible for a country to be the low-cost producer of all goods and services.

Which statement is TRUE?

production possibilities frontier

The ______ shows all combinations of goods that a country can produce.

the higher its opportunity cost of producing other goods.

The better a country is at producing one good:

the value of the opportunities lost.

The opportunity cost of a choice is:

The government should not have bailed out the domestic automobile market.

Which statement is an example of normative economics?

I, II, III, and IV

The principles of comparative advantage, specialization, and trade apply to: I. individuals. II. communities. III. regions. IV. nations.

Markets encourage specialization, which in turn increases the demand for trade.

The relationship among markets, specialization, and trade is best characterized as follows:

Making choices by comparing the additional benefits and additional costs from doing a little bit more of some activity.

What is thinking on the margin?