Week 4 Quiz (W4Q)- chapter 20

Answer the question using the accompanying cost for produets, (F) and chicken (C), In countries Singsong and Harmony, that production occurs under conditions of constant costs and that these are the only two nations in the world. Singsong Which one of the following would not be feasible for trade between Singsong and Harmony? 1F = 2C

1 chicken for 1/5 of fish

Suppose the world economy is composed of just two countries Greece. Each can produce or chemicals, but different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs that prior to specialization and tradeItaly and Greece preferred polnts / and Gon respective production possibilities curves As result of completo specialization according to comparativo advantage , the resulting gains in total output will

5 still and 15 chemicals

In the real world, specialization is rarely complete because:

A. nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.

Assume that by devoting all of its resources to the production of nation Alpha can produce 40 units of By devoting all of resources to Alpha can produce 607. Comparable figures for nation Beta are 60and We can conclude that

Alpha should specialize in Y and Beta in X.

The principal concept behind comparative advantage is that a nation should

Concentrate production on those products for which it has the lowest domestic opportunity cost

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs. It can be deduced that

Greece has a comparative advantage in chemicals

The slopes of the production possibilities curves for two nations reflect the

Opportunity costs of production in the two nations

The graph shows the production possibilities curves for two hypothetical nations Orin and Pohl which each make two hypothetical products, jaxs and keps. Which of the following statements is correct ?

Pohl has a comparative advantage in jaxs.

Refer to the graphs. Stanville has a comparative advantage in producing:

Product B

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data suggest that

West Lithuanian should specialize in, and export, beer.

The production possibilities curves suggest that

West Mudville should specialize in, and export, baseball bats.

The fact that international specialization and trade based on comparative ada at age can increase world output is demonstrated by the reality that

a nation's trading possibilities line lies to the right of its production possibilities line.

The impact of increasing, as opposed to constant, costs is to

cause the bases for further specialization to disappear as nations specialize according to comparative advantage

the impact of increasing, as opposed to constant, costs is to

cause the bases for further specialization to disappear as nations specialize according to comparative advantage

Countries engaged in international trade specialize in production based on:

comparative advantage

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained the production possibilities curves are based on the assumption of

constant cost

Suppose the world economy composed of just two countries: Italy and Greece. Each can produce steel chemicals, but levels economic efficiency. The production possibilities curves for the two countries are shown in the graphs. The assumption made about the domes production opportunity costs in both countries is that they are

decreasing

Refer to the given diagramwhich line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

has chosen to specialization in the production of cheese.

Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C), in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Singsong the domestic real cost of each chicken

is 1/2 fish

Refer to the given diagram, in which line AB is the U.S production possibllities curve and AC its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade)

is the absolute value of the slope of the line AC

In the theory of comparative advantage, a good should be produced in that nation where:

its cost is least in terms of alternative goods that might otherwise be produced.

The law of increasing opportunity costs

may limit the extent to which a nation specializes in producing a particular product.

The primary gain from international trade is

more goods than would be attainable through domestic production alone.

If a nation has a comparative advantage in the production of a good,

must give up less of other goods than other nations in producing a unit of X.

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B.

mutually advantageous specialization and trade between A and B many still be possible.

In two-nation -world, if both nations have identical production possibilities curves with constant costs, then one nation would have

no comparative advantage over the other nation.

The terms of trade reflect the

ratio at which nations will exchange two goods.

What other economic process needs to accompany international trade, for nations to benefit from such trade?

specialization in production

in a twonation world , comparative advantage in the production of a particular product means that one nation can produce

the product at the lower domestic opportunity cost than the other nation.

If two nations have straight-line production possibilities curves

there will be a basis for mutually advantageous trade provided the slopes differ

International trade based on the principle of comparative advantage creates a more efficient allocation of world economic resources.

true

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves that

world resources will be allocated more efficiently if the two nations specialize and trade based on comparative advantage.