Macro Chap 6: Gains from Trade & Comparative Advantage

Economists generally believe that a person should specialize in the production of a good or service if

they can produce the product while forgoing fewer alternative products than any other person

As long as people have different ________, everyone has a comparative advantage in something

opportunity costs

Which benefit could a company gain from using internal markets?

better allocation of its resources & more accurate predictions

Chantelle grows tomato's and sells them at the farmers market. Because the price of tomato's rises, she is encouraged to grow and sell more. This is an example of price functioning as an

incentive

Why does Apple design the iPhone in California but assemble it in China?

The United States has the comparative advantage in iPhone design

When trade is based on comparative advantage

both trading partners end up better off than when there is no trade

Price is functioning as a message when it

is a line of communication between buyers and sellers in a market

During the coronavirus pandemic, global supply chain issues caused the supply of new cars to shift left. Which role did price play in the new car market? Price was a

message to potential buyers that the marginal cost of manufacturing new cars is rising

A prediction is a market where

payoffs are linked to whether an uncertain event occurs

When a country's production mix becomes more specialized due to increased international trade based on comparative advantage

some industries in the country will shrink and possibly disappear

When a manager uses comparative advantage to assign task in a workplace, then each

task is assigned to the worker with the lowest opportunity cost for performing the task

On camping trips, Katie is much faster than her husband, Brett, as putting up and starting a fire. Who should do each task if they want to maximize their time sitting around the campfire?

They should first each focus on that task in which the have a comparative advantage. When one finishes the assigned task, they can help the other

Cornell can type reports faster & more accurately than Alice, so Cornell has a __________________________ in typing reports

absolute advantage

You pay a plumber to install a new dishwasher in your home. Which statement is FALSE?

only the plumber experiences gains from trade because the received money