EC Chapter 3 Quiz

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn

An economy s production possibilities frontier is also its consumption possibilities frontier

when the economy is self-sufficient.

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 table is

5 chairs for Mike and 3 chairs for Sandy.

Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless

Brady has a comparative advantage over everyone else in mowing his lawn.

Trade can make everybody better off because it

allows people to specialize according to comparative advantage.

Absolute advantage is found by comparing different producers'

amount of raw inputs used to produce a product

Regan grows flowers and makes ceramic vases. Jayson also grows flowers and makes ceramic vases, but Regan is better at producing both goods. In this case, trade could"

benefit both Jayson and Regan

Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. If the US exports semiconductors to Mexico and imports auto parts from Mexico

both countries, as a whole, will be better off.

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

rely upon one another for the goods and services we consume

When two countries trade with one another, it is most likely because

the two countries wish to take advantage of the principle of comparative advantage.