Chapter

In general, individuals and nations should specialize in producing those goods for which they have a(n):

comparative advantage.

When firms engage in outsourcing, ________ benefit and ______ are harmed.

consumers; the firm's domestic employees

Which of the following statements is always true?

Comparative advantage does not require absolute advantage.

According to the principle of increasing opportunity cost, expanding production requires using resources in which order?

Starting with the resource with the lowest opportunity cost and proceeding to the higher opportunity cost resources.

If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________.

absolute; Jane

The United States was unable to maintain its dominance in the production of televisions because:

automated production allowed production to be outsourced to countries with less-skilled workers.

The key to resolving the apparent paradox of international trade increasing total output yet facing much political opposition is noting that:

everyone does not benefit equally from trade.

Points that lie below the production possibilities curve are inefficient because:

more of one or both goods could be produced using currently available resources without giving up production of another good.

The fundamental reason the production possibilities curve has a downward slope is:

resources are fixed and therefore tradeoffs must be made.

The production possibilities curve shows:

the maximum production of one good for every possible production level of the other good.