CHAPTER 2
figure b
A country needs 4 units of labor to produce one car and 3 units of labor to produce one boat, and the country has 120 units of labor. Which of the figures represents this country's PPF?
all combinations of goods that a country can produce given its productivity and supply of inputs
A production possibilities frontier shows:
good with fewer inputs than others
Absolute advantage is the ability to produce a:
people buy goods for which they have higher opportunity costs than others
According to Adam Smith:
one, two, and three
According to the diagram about countries A and B, which of the following statement(s) is correct? I. Country A has a comparative advantage in Good Y. II. Country B has an absolute advantage in both goods. III. Country B has a comparative advantage in Good X.
country a produces only computers and buys books from country b
According to the figure, both countries can increase consumption if:
lower productivity in china
According to the theory of comparative advantage, the reason wages are lower in China than in the United States is:
international trade
Adam Smith advocated the benefits of:
that it is beneficial to buy a product if the seller can sell it to us cheaper than wee can make it for ourselves, regardless of the product's country of origin
Adam Smith argued
b. john has the comparative advantage in the production of cakes
Anita can bake 10 cakes in a day, but has no time left to make cookies. If she bakes only cookies, she can make 200 cookies in a day. John makes equally delicious cakes and cookies but can only make 7 cakes or 100 cookies in a day. Based on this information, which of the following statements is TRUE? *A.* Anita has the comparative advantage in the production of cakes *B.* John has the comparative advantage in the production of cakes *C.* John has the absolute advantage in the production of cookies *D.* Anita has the comparative advantage in the production of both cakes and cookies
a. david and cameron must have different preferences for the car
David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true? *A.* David and Cameron must have different preferences for the car. *B.* This trade did not create value because Cameron is buying a car that David considers worthless. *C.* Cameron is the only one made better off by the trade. *D.* David is made better off by the trade, but Cameron is made worse off.
the extent to which markets facilitate specialization through trade
Economies can grow due to:
inefficient
Refer to the figure. Point A represents an allocation of resources that is:
b. for each TV that the United States produces, it gives up 25 units of corn
Suppose the figure illustrates the United States PPF for the production of corn and TVs. Which of the following statements is TRUE? *A.* The United States should specialize in the production of corn, since they can produce more corn than TV's. *B.* For each TV that the United States produces, it gives up 25 units of corn. *C.* The United States should produce 50 TV's and 1,250 units of corn to maximize value to society. *D.* The United States has the comparative advantage in the production of TV's.
false
T/F: Although trade increases productivity, it decreases society's collective knowledge because people specialize in a very limited number of things.
false
T/F: An advantage to specialization is that it can decrease the average cost of production by concentrating on smaller-scale production.
true
T/F: Everyone, from the most to the least skilled to the most and least educated, can benefit from trade.
true
T/F: Evidence from history shows that when the extent of trade expands, the result is prosperity.
b. the united states has the comparative advantage in the production of wheat.
The figure illustrates both the U.S. and Japanese production possibilities frontiers for TVs and wheat. Based on this information, which of the following is TRUE? *A.* The United States has the comparative advantage in the production of TV's. *B.* The United States has the comparative advantage in the production of wheat. *C.* Japan has the comparative advantage in the production of wheat. *D.* Japan has the absolute advantage in the production of TV's.
c. the opportunity cost of producing a TV in japan is 2 bushels of wheat
The figure illustrates both the U.S. and Japanese production possibilities frontiers for TVs and wheat. Based on this information, which of the following is TRUE? *A.* The opportunity cost of producing a TV in the United States is 1/3 of a bushel of wheat. *B.* The opportunity cost of producing a TV in the United States is 900 bushels of wheat. *C.* The opportunity cost of producing a TV in Japan is 2 bushels of wheat. *D.* The opportunity cost of producing a bushel of wheat in Japan is 2 TV's.
shirts | computers
Use the above figure in which both Mexico and the United States each have 24 units of labor. Mexico has a comparative advantage in ______ and the United States has a comparative advantage in ______.
