Chapter 2.2

In the case of international trade, which of the following does not benefit all nations involved?

All of the above are benefits (Specialization, Comparative advantage, Ability to produce goods at a lower opportunity cost, Division of labor)

What does it mean to be "efficient?"

An economy is efficient if production of one good or service must be decreased in order to produce more of another

What does an opportunity cost of 1.0 indicate?

An equality between a given production choice and the next-best alternative

Which method accurately describes how opportunity cost is calculated?

By dividing the best alternative by the production choice made

True or False: According to early economist David Ricardo, if countries follow the law of absolute advantage, trade and specialization will be mutually beneficial

False

True or False: Economists feel that unregulated international trade is always the best solution and has no disadvantage

False

True or False: If a person has a lower opportunity cost of producing corn than other people, that person has an absolute advantage in producing corn

False

True or False: If the country called Superproducia can produce goods and services using fewer resources than any other country in the world, then Superproducia should produce everything for itself and not trade.

False

True or False: The shape of the PPF is bowed because the trade-off ratio between the two good is constant

False

Suppose you can mow a lawn in two hours and wash face cars in the same amount of time. Your neighbor, Mr. Gedye, can mow a lawn in one hour. In order for him to have a comparative advantage in mowing lawns, how many cars must he be able to wash in two hours?

Fewer than ten

Robinson can pick 50 pieces of fruit or catch 20 fish a day. Friday can pick 40 pieces of fruit or catch 10 fish in a day. Which of the following is a likely trade?

Friday gives Robinson 3 pieces of fruit in exchange for one fish

Suppose Doward can peel 15 potatoes in an hour, or he can. slice 20 onions in an hour. Shashawna can peel 30 potatoes in an hour, or she can slice 25 onions. Which of the following statement is true?

Shashawna has an absolute advantage in both activities

which phrase correctly defines comparative advantage?

The ability to do a task while giving up less alternative production than anyone else

which phrase correctly defines absolute advantage?

The ability to do task using fewer resources than anyone else

Robinson can pick 50 pieces of fruit or catch 20 fish a day. Friday can pick 40 pieces of fruit or catch 10 fish in a day. Which of the following statements is not true?

The cost of Robinson catching a fish is 2/5 of a piece of fruit.

True or False: Both people and countries are motivated by their opportunity costs to specialize

True

True or False: Trade mutually benefits those who participate in it because of the differences between opportunity costs

True

Suppose you can make 12 pizzas or paint 1 fence in an hour. Your brother, on the other hand, can make 8 pizzas or paint 2 fences in an hour. Which of the following statements is true?

You have comparative advantage cost for making 1 fence is making 1/4 of a pizza

Suppose you can clean 3 windows or wash 2 shirts in one hour. Your friend Mookie can clean 6 windows or wash 4 shirts in one hour. Which of the following statements is true?

Your opportunity cosy of cleaning one window is 2/3 of a shirt