ECON HW and potential quiz questions WK 13

refer to table 18.1. Which of the following statements is true?

Trade will benefit both countries because the US has a comparative advantage in production of soybeans

The US has

a comparative advantage in producing cars

the opportunity cost of a car is _____ truck(s) in the US and _______ truck(s) in England

.25; .67

Refer to Table 19.1. in Mexico, the opportunity cost of 1 bushel of oranges is

1 bushel of bananas

Refer to the table 19.1. In Mexico, the opportunity cost of 1 bushel of bananas is

1 bushel of oranges

The opportunity cost of producing a bushel of alfalfa in Canada is

1 bushel of soybeans

Which terms of trade benefit both countries

1 tractor for 12.5 motorcycles.

The most that china will be willing to pay for a Motorcycle is

1/10 of a tractor

Refer to Table 19.1. In Guatemala, the opportunity cost of 1 bushel of bananas is

1/2 bushel of oranges

The most that Thailand will be willing to pay for a tractor is

15 motorcycles

For both countries to benefit from trade, the terms of trade must be between ____ bushel(s) of oranges to bushel(s) of bananas

1:1 and 1:2

the opportunity cost of producing a bushel of soybeans in the US is

2 bushels of alfalfa

Refer to the table 19.1. In Guatemala, the opportunity cost of 1 bushel of oranges is

2 bushels of bananas

Before specialization, Mexico produces 160 bushels of oranges and 40 bushels of bananas, and Guatemala produces produces 30 bushels of oranges and 40 bushels of bananas. After specialization, the increase in banana production is

20 bushels of bananas

Refer to the table 18.2 The opportunity cost of a truck is _______ car(s) in the US and _______ car(s) in England

4; 1.5

Refer to Table 19.2. In Thailand, the opportunity cost of

A motorcycle is 1/5 of a tractor

Refer to table 19.1. The opportunity cost of producing a bushel of oranges in Mexico is

Half as much as that in Guatemala

Law of one price

If the costs of transportation are small, the price of the same good in different countries should be roughly the same.

Refer to table 18.1. Which of the following statements is true?

The US has an absolute advantage in the production of soybeans and alfalfa, but a comparative advantage only in the production of alfalfa

The theory of comparative advantage suggests that

The US should export cars and import trucks

When trade is free, patterns of trade and trade flows result from

The independent decisions of thousands of importers and exporters, as well as millions of private households and firms

When one country can produce a product at a lower cost in terms of other goods, that country is said to have

a comparative advantage.

For any pair of countries, there is

a range of exchange rates that can lead automatically to both countries realizing the gains from specialization and comparative advantage

Guatemala should specialize in and export _______, and Mexico should specialize in and export ______.

bananas; oranges

The main advantage of trade between two countries is that

both countries have consumption choices beyond their current resource and production constraints.

The main advantage of trade between two countries is that

both countries have consumption choices beyond their current resources and production constraints.

The purpose of the corn laws was to

discourage imports and encourage exports, thus keep the price of food high

According to the theory of comparative advantage, a country

exports the goods in which it has a comparative advantage.

Exchange rates that are determined by the unregulated forces of supply and demand are;

floating exchange rates

The opportunity cost of producing a bushel of alfalfa in the US is

half a bushel of soybeans

The opportunity cost of producing a bushel of alfalfa in the US is

half as much as that in Canada

Suppose that Argentina and Chile are both engaged in the production of copper and wheat, and that Argentina has an absolute advantage in the production of both goods. If Chile has a comparative advantage in the production of copper, then Chile

has a lower opportunity cost for copper, which means that it should specialize in production of copper and engage in trade.

an increase in US exports to Japan _____ the demand of US dollars and _____ the supply of yen.

increases; increases

When countries specialize in producing those goods in which they have a comparative advantage, they

maximize their combined output and allocate their resources more efficiently

If both countries specialize and trade with eachother, Thailand will export _____ and China will import____

motorcycles; motorcycles

specialization and trade allow a country to

produce on its production possibility frontier and consume outside it.

The united states imports televisions from japan and japan imports computer chips from the US. If the theory of comparative advantage guides trade between the two countries it must be true that

the united states has comparative advantage in producing computer chips.

Suppose a US dollar exchanges for 2 British pounds, then each pound is worth

$0.50

If you are traveling in China and you purchase a meal that costs 140 yuan and the current exchange rate is 7 yuan to the dollar, then the price of the meal in US currency is

$20

According to the theory of comparative advantage,

A country should specialize and export goods with the lowest opportunity cost.

England has

comparative advantage in producing trucks

Expansionary monetary policy

tends to lead to a depreciation of a nation's currency

A flexible exchange rate between two countries is determined by

the demand and supply of both countries' currencies

Suppose that the price of a plasma TV is $1200 in the US and 13200 in pesos in Mexico. If the current exchange rate is 10 pesos to the dollar, then purchasing power parity theory would then predict that in the long run

the exchange value of the peso will depreciate

The united states has a comparative advantage in the production of wheat , Haiti has a comparative advantage in the production of sugar. If both countries specialize based on the theory of comparative advantage,

the production and consumption of both goods will increase.

Refer to Table 19.2. In China the opportunity cost of

A tractor is 10 motorcycles

the advantage in the production of a product enjoyed by one country over another when it uses fewer resources to produce that product than the other country is

An absolute advantage.

If Brazil has a comparative advantage in the production of coffee compared to the United States, then

Brazil can produce at a lower opportunity cost compared to the US

China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario

China should export textiles and import radios

Country A has a comparative advantage compared to country B in the production of shoes if,

Country A can produce shoes at a lower cost in terms of other goods in Country B.

Country A would have an absolute advantage compared to country B in the production of corn if:

Country A uses fewer resources to produce corn than Country B does.

the theory of comparative advantage is credited to

David Ricardo

If the price of a car in the US is $26,000 and the exchange rate between the dollar and the British pound rises from $1.50 to $2.00 per pound, then the price of the American car in Britain will

Fall

Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then

India has a comparative advantage in the production of rice, and specialization and trade between the two countries would be mutually beneficial.

If russia has an absolute advantage in the production of wheat and China has an absolute advantage in the production of textiles, then

It is reasonable to expect that specialization and trade will benefit both countries

If the price of a car in the US is $22,000, and the exchange rate between the dollar and the Japanese yen falls from 125 yen to 105 yen per dollar, then the price of the American car in Japan will

Rise

If the slopes of the production possibility frontiers involving sugar and rice in countries A and B are equal,

Specialization will not benefit either country.

Refer to table 19.2. _______ has a comparative advantage in motorcyles and _____ has an absolute advantage in motorcycles.

Thailand; neither

The terms of trade refer to

The ratio at which one country trades a domestic product for imported product.

According to comparative advantage, trade between two countries

allows each of the trading countries to use its resources most efficiently

Refer to Table 19.1 Mexico has

an absolute advantage and a comparative advantage in orange production

The advantage in the production of a product enjoyed by one country over another when it uses fewer resources to produce than the other country does is

an absolute advantage.

Under a system of floating exchange rates, an excess demand for a particular currency will lead to

appreciation of that currency

Assume that blade runner specializes in producing in-line skates and Hang Ten specializes in producing surfboards. After trade Blade Runner exports 800 pairs of in-line skates and imports 200 surfboards. The terms of trade

are 4:1 in-line skates to surfboards