Exam 2: Prices,costs and Gains From Trade

Suppose the price of coffee is $6 per pound.If this price is an absolute price,what is meant by the phrase "$6 per pound"? If this price is a relative price,what is meant by the phrase "$6 per pound"?

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Question 1

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When absolute prices are used,the term dollar simply means the green pieces of paper used for currency in the U.S.If the absolute price of coffee is $6 per pound,this means that the buyer must sacrifice $6 in currency to purchase 1 pound of coffee.When relative prices are used,the term dollar is a convenient shorthand for a representative collection of other goods available in the economy.If the relative price of coffee is $6 per pound,this means that the buyer can trade 6 units of other goods in exchange for 1 pound of coffee.

If inflation causes the absolute prices of all commodities to double,then the relative prices

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Question 2

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Suppose there are only two goods: food and clothing.What does it mean for the U.S.to have a comparative advantage in food production?

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Question 3

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Suppose that because of inflation,the absolute price of a gallon of milk increases by 20% and the absolute price of a gallon of gasoline increases by 10%.In this situation,the price of milk relative to the price of gasoline

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Question 4

If each person specializes in his area of comparative advantage and then trades for the goods he wants to have,everyone will be made better off.

(True/False)

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Question 5

If people have the same abilities,then

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Question 6

Suppose there are only two goods: lettuce and grapes.In California,a head of lettuce sells for 50¢ and a bunch of grapes sells for $1.In Nebraska,25¢ must be added to these absolute prices to cover transportation costs.How do these transportation costs affect the relative prices of lettuce and grapes?

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Question 7

In order for there to be a gain from trade,there has to be a difference in either tastes or abilities.

(True/False)

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Question 8

Suppose there are only two goods: guns and roses.In Los Angeles,the absolute price of roses is 50 dollars per dozen.If the relative price of roses in terms of guns is 1 guns per dozen roses,then the absolute price of guns is

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Question 9

Kelly has received a $50 check from her Grandparents to help with her expenses at college.She has narrowed her choices of how to spend the money to three: a new backpack,a dinner out with a friend,a fleece vest.Of these she likes the vest best and the backpack least.What is her cost of buying the fleece vest?

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Question 10

When relative prices are measured in terms of dollars,the term dollar refers to currency.

(True/False)

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Question 11

Mexico and Japan The following questions refer to the following table which shows the abilities of Mexico and Japan to produce food and cloth. Food and cloth are the only two commodities in the world and their production requires only labor. The amounts of labor required to produce one unit of each of these commodities in the two countries are shown in the table below. -Refer to Mexico and Japan.Can trade in food and cloth benefit Mexico and Japan?

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Question 12

When inflation causes the absolute prices of all commodities to rise,what happens to the relative prices of those commodities?

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Question 13

Suppose there are only two goods (bread and wine)and only two countries (England and Portugal).In England,the cost of producing 1 bottle of wine is 4 loaves of bread.What is the cost of producing 1 loaf of bread in England? Under what circumstances will England specialize in bread production and purchase its wine from Portugal? Explain.

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Question 14

A man can rewire a house in 12 hours and can panel a room in 15 hours,and his teenage son can rewire a house in 18 hours and can panel a room in 16 hours.Who is more efficient in rewiring a house,and who is more efficient in paneling a room?

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Question 15

The towns of Mattoon and Charleston can produce one of two goods: books and bagels.In Charleston factories,6 laborers can produce 100 books in an hour,while 12 laborers can produce 400 bagels in an hour.

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Question 16

Trading is beneficial whenever people differ in their abilities or differ in their tastes.

(True/False)

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Question 17

In 1 hour,Robinson Crusoe can either shoot 4 birds or catch 4 fish.A typical native on a nearby island can either shoot 5 birds or catch 10 fish in an hour's time.Which of the following is true according to the doctrine of comparative advantage?

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Question 18

When silk is shipped from China to Atlanta,transportation costs will make the price of high-quality silk relative to low-quality silk higher in Atlanta than in China.

(True/False)

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Question 19

Suppose that there are only two goods in Japan,sushi and saki.The absolute price of a 100-gram plate of sushi is 200 yen,and the absolute price of a liter of saki is 100 yen.What is the relative price of saki in terms of sushi?

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Question 20

Showing 1 - 20 of 73

Suppose the price of coffee is $6 per pound.If this price is an absolute price,what is meant by the phrase "$6 per pound"? If this price is a relative price,what is meant by the phrase "$6 per pound"?

If inflation causes the absolute prices of all commodities to double,then the relative prices

Suppose there are only two goods: food and clothing.What does it mean for the U.S.to have a comparative advantage in food production?

Suppose that because of inflation,the absolute price of a gallon of milk increases by 20% and the absolute price of a gallon of gasoline increases by 10%.In this situation,the price of milk relative to the price of gasoline

If each person specializes in his area of comparative advantage and then trades for the goods he wants to have,everyone will be made better off.

If people have the same abilities,then

In order for there to be a gain from trade,there has to be a difference in either tastes or abilities.

Suppose there are only two goods: guns and roses.In Los Angeles,the absolute price of roses is 50 dollars per dozen.If the relative price of roses in terms of guns is 1 guns per dozen roses,then the absolute price of guns is

When relative prices are measured in terms of dollars,the term dollar refers to currency.

When inflation causes the absolute prices of all commodities to rise,what happens to the relative prices of those commodities?

A man can rewire a house in 12 hours and can panel a room in 15 hours,and his teenage son can rewire a house in 18 hours and can panel a room in 16 hours.Who is more efficient in rewiring a house,and who is more efficient in paneling a room?

The towns of Mattoon and Charleston can produce one of two goods: books and bagels.In Charleston factories,6 laborers can produce 100 books in an hour,while 12 laborers can produce 400 bagels in an hour.

Trading is beneficial whenever people differ in their abilities or differ in their tastes.

In 1 hour,Robinson Crusoe can either shoot 4 birds or catch 4 fish.A typical native on a nearby island can either shoot 5 birds or catch 10 fish in an hour's time.Which of the following is true according to the doctrine of comparative advantage?

When silk is shipped from China to Atlanta,transportation costs will make the price of high-quality silk relative to low-quality silk higher in Atlanta than in China.

Suppose that there are only two goods in Japan,sushi and saki.The absolute price of a 100-gram plate of sushi is 200 yen,and the absolute price of a liter of saki is 100 yen.What is the relative price of saki in terms of sushi?

Supply,demand,and Equilibrium

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

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Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

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