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
