Economics 2105 Ch. 7 HW

By specializing in the production of the goods and services in which they have _____________​advantage, countries allocate resources more efficiently. In other​ words, goods and services are produced at their lowest _______________ cost and world output increases.

1. a comparative 2. opportunity

Which of the following describes the extent of international trade in the U.S. economy? A. About 20% of U.S. manufacturing jobs depend directly or indirectly on exports. B. Since​ 1950, U.S. imports have increased from less than 5 percent of GDP to about 1010 percent in 2008. C. Since​ 1950, U.S. exports have decreased from about 11 percent of GDP to about 4 percent in 2008. D. Each​ year, the U.S. exports less than 10 percent of many agricultural crops such as wheat. E.Since​ 1950, U.S. exports have decreaseddecreased and U.S. imports have increasedincreased.

A. About 20% of U.S. manufacturing jobs depend directly or indirectly on exports

Suppose France and Spain produce only cloth and wine. Assume that each country uses only labor to produce each​ good, and that the cloth and wine made in France and Spain are exactly alike. The table below shows how much each country can produce of each good with one hour of labor. Output per Hour of Labor France: cloth- 21 wine- 16 Spain: cloth- 5 wine- 9 According to the​ table, the opportunity cost to FranceFrance of producing one more unit of cloth is 0.76 units of wine ​(enter a numeric response using a real number rounded to two decimal​ places)​, and the opportunity cost to SpainSpain of producing one more unit of cloth is 1.80 units of wine. ​Thus, we can conclude that: A. France has a comparative advantage in producing cloth and Spain has a comparative advantage in producing wine. B. Spain has a comparative advantage in producing cloth and wine. C. France has a comparative advantage in producing cloth and wine. D. France has a comparative advantage in producing wine and Spain has a comparative advantage in producing cloth.

A. France has a comparative advantage in producing cloth and Spain has a comparative advantage in producing wine.

Who is harmed when individual nations move from autarky to free​ trade? A. The owners of the firms that went out of business. B. The foreign customers of the firms that now specialize. C. The nation taken as a whole. D. The domestic customers of the firms that went out of business.

A. The owners of the firms that went out of business

Comparative Advantage A. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors. B. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower absolute cost than competitors. C. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a higher opportunity cost than competitors. D. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a higher absolute cost than competitors.

A. is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Although international trade leads to substantial net​ benefits, not everyone gains from international trade. Which of the following groups is most likely to lose from​ trade? A. the workers and companies in the industries that compete with the imports B. businesses outside the import sectors C. businesses that use inputs and products that are being imported D. consumers

A. the workers and companies in the industries that compete with the imports

The table below shows the quantity of 2 goods that a worker can produce per day in a given country. Country A: food- 6 clothing- 3 Country B: food- 1 clothing-2 Which of the following statements is true? A. Country A has an absolute advantage in the production of both​ goods, and Country B has a comparative advantage in the production of both goods. B. Country A has an absolute advantage in the production of both goods and a comparative advantage in the production of food. C. Country A has an absolute advantage in the production of both goods and a comparative advantage in the production of both goods. D. Country A has an absolute advantage and a comparative advantage in the production of​ food, and Country B has an absolute advantage and a comparative advantage in the production of clothing.

B. Country A has an absolute advantage in the production of both goods and a comparative advantage in the production of food.

Among the main sources of comparative advantage are the​ following: A. climate and natural​ resources, relative abundance of labor and​ capital, technology, external diseconomies. B. climate and natural​ resources, relative abundance of labor and​ capital, technology, external economies. C. climate and natural​ resources, relative scarcity of labor and​ capital, technology, external economies. D. climate and natural​ resources, relative abundance of labor and​ capital, inefficient​ technology, external economies.

B. climate & natural resources, relative abundance of labor and capital, technology, external economies

The term external economies refers to A. the process of turning inputs into goods and services. B. the reduction of costs resulting from increases in the size of an industry in a given area. C. the benefits a firm receives from firms in other industries being located nearby. D. the reduction of production costs due to increased capacity utilization.

B. the reduction of costs resulting from increasing in the size of an industry in a given area

Which of the following is a source of comparative​ advantage? A. autarky B. the relative abundance of capital and labor C. absolute advantage D. All of the above.

B. the relative abundance of capital and labor

What is absolute advantage? A. The ability of an​ individual, firm, or country to reach a higher production possibilities frontier by lowering opportunity costs. B. The ability of an​ individual, firm, or country to produce a good or service at a lower opportunity cost than competitors. C. The ability of an​ individual, firm, or country to produce more of a good or service than competitors when using the same amount of resources. D. The ability of an​ individual, firm, or country to consume more goods or services than others at lower costs.

C. The ability of an individual, firm, or country to produce more of a good or service than competitors when using the same amount of resources.

We do not see complete specialization in the real world because A. not all goods and services are traded​ internationally, production of most goods involves decreasing opportunity​ costs, and tastes for products differ. B. not all goods and services are traded​ internationally, production of most goods involves constant opportunity​ costs, and tastes for products are remarkably uniform. C. not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ. D. all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products are remarkably uniform.

C. not all goods and services are traded internationally, production of most goods involves constant opportunity costs, and tastes for products are remarkably uniform

Which of the following is not a​ non-tariff barrier to​ trade? A. Quotas B. Embargos C. Health and safety requirements D. Ad valorem tax on imports E. National security grounds

D. Ad valorem tax on imports

You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your​ neighbor, which of the following statements is​ true? A. You can trade some of your apples for some of your​ neighbor's cherries, and both of you will end up with more of both fruit. B. Your neighbor is better off specializing in picking cherries. C. You have a comparative advantage in picking apples. D. All of the above.

D. All of the above

​_____ is a situation in which a country does not trade with other countries. The​ _____ is the ratio at which a country can trade its exports for imports from other countries. A. Terms of​ trade, autarky B. Oikonomia, prices C. Plutarky, price ratio D. ​Autarky, terms of trade

D. Autarky, terms of trade

Briefly explain whether you agree with the following​ argument: ​"Unfortunately, Bolivia does not have a comparative advantage LOADING... with respect to the United States in the production of any good or​ service." A. Although Bolivia may not have a comparative advantage in the production of any good or​ service, this is not unfortunate because what matters for trade is that it has a competitive advantage. B. Although Bolivia may not have a comparative advantage in the production of any good or​ service, this is not unfortunate because what matters for trade is that it has an absolute advantage. C. The argument above is reasonable given that​ Bolivia's GDP is so small relative to the United States. D. If the U.S. trades at all with​ Bolivia, then the argument above is false. There would be no trade unless both countries were made better​ off, and this would imply Bolivia has the comparative advantage in the production of at least one good or service.

D. If the U.S. trades at all with Bolivia, then the argument above is false. There would be no trade unless both countries were made better off, and this would imply Bolivia has the comparative advantage in the production of at least one good or service.

Which of the following is not a main source of comparative​ advantage? A. External economies of scale. B. Relative abundance of labor and capital. C. Technology. D. Internal economies of scale. E. Climate and natural resources.

D. Internal economies of scale

By​ trading, countries are able to consume more than they could without trade. This outcome is possible because A. shifting production to the more efficient country—the one with the comparative advantage—increases total production. B. inefficiencies in resource allocation are reduced. C. world production of both goods increases after trade. D. all of the above.

D. all of the above

The world is often described as having a global economy. How important is international trade to the United States? A. The U.S. exports fewer goods than any of the other 8 highest income countries. B.In the​ U.S., exports make up more than half of GDP. C. In the​ U.S., imports are increasing but not as a portion of GDP. D. The U.S. exports more than it​ imports, resulting in a trade deficit. E. In the​ U.S., exports are smaller fractions of GDP than in most other

E. In the U.S., are smaller fractions of GDP than in most other

Why do the goods that countries import and export change over time?

because the goods in which they have a comparative advantage change over time

imports

goods & services bought domestically but produced in other countries

exports

goods & services produced domestically but sold to other countries

Another restriction with a similar outcome would be to impose a limit on the amount of a specific good that can be imported. This restriction is called a

quota

If the government wants to protect import competing industries and its workers from foreign​ competition, it can impose a tax on imports called a

tariff

tariffs

taxes imposed by a government on imports of a good into a country

Since countries are producing goods and services at different opportunity​ costs, _____________ can be negotiated that will allow all countries to consume more with trade than in autarky.

terms of trade