MICROECONOMICS FINAL PT 2

A summary record of a countries international economic transactions in a given time period is the

Balance of payments

Based on the information in Table 35.1, assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods. The opportunity cost of producing 1 computer in China is

1/3 of a ton of soybeans

Based on the information in Table 35.1, assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods. The opportunity cost of producing 1 ton of soybeans in the United States is

5 computers

Appreciation of a dollar refers to

A fall in the dollar price of a foreign currency

The infant industry argument can be justified because

A new industry may be difficult to start in the face of existing foreign competitors

The U.S. desire for foreign currency represents

A supply of U.S. Dollars

Over a given period of time, if imports are greater than exports, the result is

A trade deficit

Consumption possibilities, during a given time, refer to

Alternative combinations fo goods and services that a country can consume

The demand for U.S. dollars in the foreign exchange market is determined by all of the following except

American demand for american products

Depreciation of a dollar refers to

An increase of the dollar price in foreign currency

The demand for labor and other factors of production typically decline in a recession because those factors

Are derived of the demand for final output, which also declines in a recession

Which of the following generates demand for foreign currencies

Expediters by americans traveling abroad

Goods and services sold to foreign buyers are

Exports

The supply of U.S. dollars is determined by all of the following except

Foreign demand for american exports

The capitol account balance is equal to the

Foreign purchases of U.S. assets minus U.S. purchases of foreign assets

If we move to the right along the upward sloping labor supply curve, we observe that the cost of labor

Increases due to the increasing opportunity cost

A country has comparative advantage of a good if

It can produce a good at a lower opportunity cost compared to another country

When one country can produce a given amount of a good using fewer inputs than any other country

It has an absolute advantage in producing the good

A firms demand for labor is referred to as a derived demand because

It is derived from the demand for the product that the labor is producing

The law of diminishing return states that

MPP of labor declines as more labor is employed

The United states has an absolute advantage in producing T-shirts but not a comparative advantage because

Other countries, such as china, can produce t shirts at a lower opportunity cost relative to the united states

The exchange rate is the

Price of one country's currency expressed in terms of another countries currency

Increased trade restrictions

Reduce total consumption possibilities

The elasticity of labor supply measures the

Responsiveness of labor supplied to changes in the wage rate

An individuals labor supply curve

Slopes upward initially and then may bend backward

The amount of Good A given up for Good B is the in trade is the

Terms of trade

The terms of trade between two countries refer to

The amount of Good A given up for Good B

The marginal physical product of labor is equal to

The change in total output divided by the change in quantity of labor

The marginal revenue product of labor is equal to

The marginal physical product multiplied by the marginal revenue of the output

Exports minus imports define a countries

Trade balance

The current account balance is equal to

Trade balance + Unilateral transfers

The opportunity cost of working is the

Value of leisure time that must be given up

If wages are relatively high, the individual labor supply curve may

bend backwards

Goods and services purchased from international sources are

import

As more hours are worked, the marginal utility of leisure time tends to

increase

The elasticity of labor supply does not depend on

the demand for labor

If consumers decide to buy fewer strawberries, then the

Demand for strawberry pickers will fall

The demand for dollars in the foreign exchange market

Depends in part on the foreign demands for U.S. goods

Assume the United States and Canada have the same amount of resources. In a given time period, the United States can produce 3 tons of steel or 300 tons of wheat. Canada can produce 4 tons of steel or 400 tons of wheat. This means that

Canada has an absolute advantage in both steel and wheat

Suppose China can produce 200 TVs or 200 DVD players. South Korea can produce either 100 TVs or 200 DVD players. In terms of TV production we can conclude that

China has a comparative advantage