Exam 3: Interdependence and the Gains From Trade

-Refer to Table 3-6. Which country has a comparative or absolute advantage in each product?

-Refer to Table 3-6. What is the opportunity cost of one unit of cheese in Italy?

-Refer to Table 3-2. What does each producer have an absolute advantage in?

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5. If Fred and Ginger devote half of their time (20 hours) to the production of each good, what would the total production be?

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. What is the opportunity cost of 1 bushel of oats in Cornland?

-Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the farmer?

-Refer to Table 3-3. What does each of the two producers have a comparative or absolute advantage in?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3. What does each of the two producers have a comparative advantage in?

For a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

Figure 3-5 These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. -Refer to Figure 3-5. Who has a comparative advantage in each good?

What is the opportunity cost of an item?

The producer who has the smaller opportunity cost of producing a good is said to have an absolute advantage in producing that good.

South Korea can produce shoes, clothes, TV sets, and computers cheaper than any other country. What would one expect South Korea to export?

-Refer to Table 3-2. What is the opportunity cost of 1 kilogram of meat for the rancher?

-Refer to Table 3-5. Which country has a comparative advantage in each product?

-Refer to Table 3-6. What is the opportunity cost of one unit of cheese in Denmark?

-Refer to Table 3-3. What is the opportunity cost of one coat for Maria?

Shawn can produce beach towels at a lower opportunity cost than Larissa. Who has an absolute or a comparative advantage in the production of beach towels?

Figure 3-4 -Refer to Figure 3-4. What does each of the two producers have a comparative advantage in?

What economic concept is the most relevant when defining comparative advantage?