Econ...

I. Two countries produce the same goods for the same opportinity cost II. Two countries produce different goods for different opportinity costs III. Two countries are isolated by geography and politics IV. Two countries have the same identical markets What fact or facts support a situation where trade is advantageous?

II

If you were doing a presentation about "balance of trade," which journal entry would likely be the MOST helpful?

"Exports Take a Strong Hit in 3rd Quarter"

If the the United States exports $100 million of goods and imports $150 million, what does the United States have?

a trade deficit

If the the United States imports $100 million of goods and exports $150 million, what does the United States have?

a trade surplus

Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage?

A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.

The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What is the benefit of the U.S. producing only Product B and Japan producing only Product A?

Because of comparative advantage, the two countries can produce a greater amount of products.

Country Widgets Produced by 1 Unit of Labor A 65 B 80 Based on the information in the table, which BEST explains the relationship between Country A and Country B?

Country B has an absolute advantage over Country A.

The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 Use the chart to answer the accompanying question. Why should the U.S. and Japan trade products A and B, even if they can both produce the products individually?

The U.S. has a comparative advantage in producing Product B and Japan in Product A, which means overall trade increases.

What is one way that a negative trade balance can be converted into a $0 balance of payments?

The imposition of tariffs

The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What is the MOST LIKELY result of specialization in producing Products A and B?

The increased output means the U.S. and Japan can trade excess units of Products A and B.

The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What happens to the production of Product A as a result of comparative advantage?

The output of Product A increases to 60,000 total units.

You and two of your friends decide to open an e-business selling a product online. Instead of all three partners creating the product, you each specialize in one aspect of the business. This is MOST reflects the concept of

You and two of your friends decide to open an e-business selling a product online. Instead of all three partners creating the product, you each specialize in one aspect of the business. This is MOST reflects the concept of

A Weak Dollar by The Columbus Dispatch, September 7, 1999 If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major foreign currencies. On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods. The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the Euro. According to the passage, Midwestern farmers have surplus grain to sell. This is an example of

absolute advantage

Pat decides to purchase a Hyundai from South Korea instead of the U.S.-produced Ford because of the vehicle's lower price. This illustrates the

absolute advantage of South Korea in producing Hyundai vehicles.

Because Nebraska specializes in the production of corn and Maine specializes in the production of lobsters, the two states could engage in trade that benefits both parties. This law of economics is known as

comparative advantage

Which of these international trade concepts results in specialization and trade increases in total world output?

comparative advantage

With regards to international trade, which economic concept has the most importance on a country's specialization and trade?

comparative advantage

nation's ability to produce a product more efficiently than another country is referred to as

comparative advantage.

Country X can produce 1,000 units of food and 2,000 units of clothes. Country Y can produce 1,000 units of food and 1,000 units of clothes. In order to maximize trade according to the principles of comparative advantage,

country Y should produce food and import clothes from country X.

One of the PRIMARY reasons that trade between nations takes place is because

nations produce a surplus at a lower cost and export it for goods that are too costly to produce.

Which of these is a major motivation for countries to trade with one another?

obtaining scarce resources

The concept of comparative advantage makes the assumption that everyone will be better off

producing the products they produce relatively best.

Which of these BEST describes a situation in which a country has a "trade deficit"?

their imports exceed their exports