learning curve 8 & 9

ensure a reasonable standard of living for the workers involved.

"Fair-trade" advocates argue that we should pay higher prices for imports—high enough to:

better working conditions and higher incomes for foreign workers

"Fair-trade" advocates claim fair trade would yield_____, though at the cost of higher prices in the United States.

exploiting the benefits of mass production

A country can create its comparative advantage by _____; this refers to large-scale production that gives a country so much bargaining power.

consider its implications in an analogous setting.

A letter from the American light-bulb manufacturers about the cheap imports of light shows us that one way to assess the validity of an argument is to:

the buyer's marginal benefit

A price tells potential suppliers _____, or the willingness to pay.

tax on imported products

A tariff is a _____.

increase the domestic price, due to the higher trade costs.

A tariff on imports will:

the ability of one person to do a task using fewer inputs.

Absolute advantage is:

sufficiently far below

According to the cost-benefit principle, you should only import a good if the price you can get it for overseas is _____ the local price.

unemployment is not related to imports.

Across countries, a study about international trade sought for a relationship between how much a country imports (share of income spent on imports) and the unemployment rate, and found that:

better working conditions; the cost of higher prices

Advocates of fair trade claim fair trade would yield _____ and higher incomes for foreign workers at _____ in the United States.

countries have agreed to increase tariffs on imports.

All of these conditions can explain why people are more integrated with the rest of the world than at any time in human history EXCEPT:

absolute advantage

Ally and Zoe are roommates that alternate their chores each month. Zoe compares her time spent on each chore to that of Ally and found that Ally has the best ability to do the chores in the least amount of time. She suggests that Ally should do all chores. The concept that Zoe used is called _____, which does not apply the costs like economists do.

minimum standards

America's voters have agreed, through the laws passed by their elected officials, that businesses must meet certain _____.

limit on the quantity of a good that can be imported.

An import quota is a(n):

produce more tomatoes.

An increase in the demand for tomatoes raises the price and sends a signal to tomato farmers to:

foreign firms temporarily charging extremely low prices

Anti-dumping laws try to prevent business practices such as _____ so that that they can drive their U.S. competitors out of business.

more cooperation from overseas.

Anxiety about globalization is not just about economics. The closure of an auto plant is not just about lost jobs; it can progress to multiple circumstances EXCEPT:

If he focuses on the task for which he has a comparative advantage, the whole group will produce more.

As a manager, you assign one task to each member of your team based on each member's comparative advantage. Logan, one of your teammates, argues that he is best at everything and wants to do multitasking. How would you explain to Logan the benefits of reallocating tasks?

opportunity cost

As a manager, you have to decide specific tasks for each person in your team. You should focus on _____ because you want to minimize what you have to give up to get the task done.

shielded fledgling businesses from international competition.

Brazil banned imports of computers for many years, hoping that new Brazilian businesses would spring up to meet demand and, through time, would develop efficient production methods. As a result, computer prices in Brazil were high, and several inefficient computer businesses eventually went bust. This happened because Brazil's government:

increases; more valuable

Buyers and sellers communicate through price. When people want to buy more boats, the price of boats _____. This change in price sends a signal to boat builders to produce more boats, because boats are _____.

build more houses

Buyers and sellers communicate through price. When people want to buy more houses, the price of houses increases. This change in price sends a signal to home construction companies to _____ because houses are more valuable now.

export; a lower opportunity cost; import

Comparative advantage yields a pretty stark piece of advice: Produce what you're good at and buy what you aren't. Applied to international trade, this says to _____ the stuff you can produce at _____, and _____ other stuff.

"People trade. Countries don't."

Compared to the general public, economists have different views on international trade such as:

not just about business; consumers matter, too

Compared to the general public, economists have different views on international trade. For example they believe that trade is _____.

$1.69

Countries with higher wages have higher productivity. In India, manufacturing workers earn _____ per hour.

opportunity cost for dentists to clean teeth is higher than that for hygienists.

Dentists use comparative advantage to assign workers to tasks. They allocate the task of cleaning to a hygienist because the:

Yes, both of them efficiently allocate scarce resources to the best uses.

Do internal markets work the same way as regular markets do?

people trade; countries don't.

Economists explain that trade is not war; it's millions of people cooperating with strangers to get a better deal. Economists believe that:

these temporary effects can last long enough to be nearly permanent for the people involved.

Economists may need to pay more attention to the short-run disruption from international trade because:

is about cooperation, not competition.

Economists view international trade differently from the general public in that they believe that trade:

allocate the donated food more efficiently

Feeding America has discovered that the forces of supply and demand can _____ than their managers can.

Opportunity costs have risen.

Globalization is one of the most important forces in your lifetime. What is NOT causing economic opportunities to extend across national borders?

the forces of supply and demand

Google has discovered that _____ can allocate its resources more efficiently than their managers can.

the marginal cost of producing more is high.

High prices communicate to buyers that:

They communicate with buyers through price.

How do Chinese tea farmers learn about a rise in the popularity of tea in the West?

skill-intensive; import-competing

In the United States, international trade is likely to increase wages in _____ industries and reduce wages in _____ industries.

comparative advantage; opportunity cost is lower

Instead of making everything yourself, you should specialize in those activities where you have a(n) _____, because this means your _____ than that of others.

markets within a company to buy and sell scarce resources.

Internal markets refer to:

declining trade costs.

International trade has been a growing share of the U.S. economy throughout the entire postwar period. This trend has transformed the economy largely due to:

globalization

International trade has been a growing share of the U.S. economy throughout the entire postwar period. This trend, which has transformed the economy, is sometimes called _____.

is embodied in imports produced by foreign workers.

International trade has some of the same effects that immigration does, even though international trade does not involve foreign laborers entering the United States. This happens because foreign labor:

raises consumer surplus.

International trade has transformed the economy. When we allow imports, it:

protecting national security

International trade makes countries more reliant on one another. Many suggest that we should domestically make strategically important goods like those in high-tech fields. This argument is about _____.

Lakisha 4/3; Zara 2

Lakisha and Zara are partners in a small suburban law office. They want to determine who should deal with employment contracts. Lakisha can write a will in 3 hours, or an employment contract in 4 hours. Zara is slower, and it takes her 4 hours to write a will, and 8 hours to write an employment contract. What are the opportunity costs for Lakisha and Zara to produce an employment contract?

Businesses can obtain useful information about possible future disruptions to input costs.

Many buyers use futures contracts to agree to purchase a commodity at a specific time in the future. What is one benefit of looking at the prices of such futures contracts to businesses that produce these commodities?

gains from trade

Market forces have allowed South Koreans to explore and exploit _____, and this has made them enormously better off.

specializing in the narrow task for which they hold a comparative advantage.

Nobel laureate Milton Friedman noted that every single part of the pencil is produced by folks who are:

a centrally planned government

North Korea uses _____ to direct its economic activities.

Ofira: ½ meal; Firuze: 1 meal

Ofira and Firuze want to determine who has the lowest opportunity cost of cleaning the kitchen. Ofira spends 2 hours cooking a meal and 1 hour cleaning the kitchen. Firuze spends 2 hours cooking a meal and 2 hours cleaning the kitchen. What are the opportunity costs for Ofira and Firuze of cleaning the kitchen?

Ofira: 2 rounds of cleaning the kitchen; Firuze: 1 round of cleaning the kitchen

Ofira and Firuze want to find out who has the lowest opportunity cost of cooking a meal. Ofira spends 2 hours cooking a meal and 1 hour cleaning the kitchen. Firuze finishes cooking a meal in 2 hours and spends 2 hours cleaning the kitchen. What is the opportunity cost for Ofira and Firuze of cooking a meal?

countries with higher wages have higher productivity.

On average, U.S. manufacturing workers earn $39 per hour, compared to $3.96 in Mexico. Wages aren't going to be equalized anytime soon, because:

trade is a threat, and not just an opportunity.

One of the blind spots of the economic thought about trade is that:

unique skills, production methods, or expertise that can lower costs of production.

One of the three factors that shape comparative advantage is developing a specialized skill, which refers to:

it's hard for workers to retrain and find new jobs.

Opening up to international trade only has a temporary effect on unemployment but may become permanent for some people because:

decrease their purchases

People respond to the price because it is an incentive. A high price is an incentive for buyers to _____.

price.

Potential buyers and potential suppliers communicate through:

True, the manager should allocate each task to the person with the lowest opportunity cost.

Shrewd managers use comparative advantage to figure out how to assign their workers to different jobs. Assess this statement.

efficiently allocate scarce resources to the best uses.

Similar to regular markets, internal markets help companies:

that gains from trade make people better off.

Some people argue that international trade has no benefit and causes damage to domestic markets. The critics overlook the fact that comparative advantage drives international trade, and that the benefit of international trade is:

creates a line of communication between buyers and sellers.

Suppose that desktop computers become more popular due to fear of radiation sickness being caused by laptops. The resulting rise in price is a signal that:

buyers want more pineapples

Suppose that pineapples become more popular. The resulting rise in price sends a signal that _____.

tends to decrease over time.

The U.S. trade policy has been different from what it was over a century ago. The average tariff charged on imports into the United States:

jointly agree to reduce or eliminate trade barriers.

The World Trade Organization (WTO) provides a way for all its member nations to:

producer surplus

The _____ is an area above the supply curve, but below the price.

interdependence

The _____ principle reminds us that all your economic life depends on decisions made by others, including those made by people all around the world.

increasing global integration

The _____—of economies, cultures, political institutions, and ideas—has led our lives to become increasingly connected with those of folks living in other countries.

comparative advantage

The ability to do a task at a lower opportunity cost is called _____.

1.9; broadly encourages international trade

The average tariff charged on imports into the United States is _____% because the United States _____.

is not just about economics.

The closure of an auto plant is not just about lost jobs; it can also mean the death of a city, the end of a particular way of life, and the loss of local traditions. This scenario explains the blind spot of trade that trade:

marginal costs.

The costâ€benefit principle tells you to pay careful attention to the price, and in a competitive market, the price is equal to the:

comparative advantage leading to greater economic surplus.

The economic argument that is in favor of international trade is based on:

is good for Americans.

The five arguments for limiting international trade that are the discussed in the chapter all argue whether or not international trade:

the marginal benefit

The food bank in Houston knows how beneficial it would be to receive a truckload of fruit. This means that it knows _____ of its food bank.

trade is a threat, and not just an opportunity

The general public view international trade differently from the economists. They believe that:

shield domestic workers from foreign competition.

The government policy of restricting the number of foreigners immigrating to the United States is used to:

a high price of quinoa

The high marginal cost of producing more quinoa leads to _____ because it is difficult for farmers to expand the farmland.

marginal benefit; values it most

The idea of an internal auction at Feeding America is that every food bank knows its _____. So, the more they want to get a particular food item, the more they will bid, leading to each food item being allocated to the food bank that _____.

why we can do a task with fewer outputs.

The logic of comparative advantage can explain many economic activities, EXCEPT:

market forces

The market economy in South Korea uses _____ to direct its economic activities.

what you must give up to get it.

The opportunity cost principle reminds you that the true cost of something is:

The price of shirts rises to $16.

The price of a shirt in the United States is $18. The world price for a shirt is $12. What happens if the government imposes a $4 tariff on shirts in the U.S. market?

experiences gains from trade.

The result of South Korea adopting a market economy is that the country:

specialization

The result of using comparative advantage is an extraordinary degree of _____, in which prices play a central role in coordinating economic activity.

quinoa farmers to sell more quinoa.

The skyrocketing price of quinoa sent a signal to:

The price of watermelons in the United States will fall to $3.

The world price for watermelons is $3 each. In the United States, the price for watermelons is $6 each. What will happen to the U.S. market for watermelons when imports are allowed?

the price

Through the process of prediction markets, _____ will reflect market information.

allocate each task to the person with the lowest opportunity cost.

To get the most output with your given inputs, you should:

centralizes power and directs all economic activities.

Unlike South Korea's leader, the leader of North Korea:

Both countries are better off and it creates gains from trade.

What are the consequences when two countries allow international trade?

It reallocates resources, goods, and services to better uses.

What does the market do?

People argue overseas competitors are unfairly dumping their cars on the U.S. market.

What is NOT one of the central debates about harvesting the Iowa car crop?

They should harness the power of market forces.

What is a lesson learned for the management of individual companies from the Korean peninsula?

Comparative advantage

What is the source of the gains from trade?

comparative advantage

What is the specific term that economists use when one person completes a particular task at a lower opportunity cost than another person does?

The country will export T-shirts.

What will happen if the world price of T-shirts is above a country's domestic price?

sell their goods or services to foreign buyers.

When American firms choose to export, they:

allowing the scientists to trade the resources they needed.

When NASA sent a spacecraft to Saturn, it set up an internal market by:

decrease; win; lose

When Sweden refuses to buy lobsters exported from Maine, this causes the domestic price of lobster in the United States to _____. The domestic buyers _____ whereas the domestic sellers _____.

imports

When a country allows _____, the domestic price declines to the world price. The quantity demanded by domestic buyers increases, resulting in an increase in consumer surplus.

signal

When a good becomes more popular, its price rises. This change in price is a(n) _____ creating a line of communication between buyers and sellers.

increase in market demand

When a good becomes more popular, its price rises. This refers to a(n) _____ for this good.

the knowledge problem; the information they need is not available

When decision makers experience _____, they are unable to make a good decision because _____.

are unable to make a good decision

When decision makers experience a knowledge problem, they _____ because the information they need is too broadly dispersed.

the managers cannot identify the best use for a truckload of food.

When each food bank knows its marginal benefits, but no one has access to the overall information of every food bank, this causes a problem for managers at headquarters because:

Time

When people reallocate stuff, they are better off and end up with gains from trade. Stuff is a broad term that can be applied in the labor market. In the labor market, what does the stuff that workers have for trade refer to?

considerably increase

When quinoa became popular, the sharp increase in demand led the price of quinoa to _____ over a few years.

increases; higher

When the foreign demand for computer software increases, the demand for highâ€skilled labor in the United States _____, leading to _____ wages in this sector.

buy goods or services from foreign sellers.

When you choose to import, you:

Increasing minimum wage

Which is NOT an argument for limiting international trade?

Minimum wage needs to be increased.

Which is NOT an argument for limiting international trade?

It allows people to do a task in which they have an absolute advantage.

Which of the following is NOT true of the opportunity cost principle?

Markets reallocate stuff to its best uses, which make people better off.

Which of these BEST explains what markets do?

They efficiently allocate scarce resources to the best uses.

Which role do both regular markets and internal markets have in common?

raise some wages while lowering others

While international trade doesn't affect the average wage earned by workers very much, it does_____, even within the United States.

Their trade costs are prohibitively expensive, and it is nearly impossible to transport a house.

Why is there almost no international trade in medical services, and no international trade in houses?

Internal markets

_____ are markets within a company that allows different divisions to buy and sell its scarce resources.

Antiâ€dumping laws

_____ prevent(s) unfair competition.