Exam 2: The Power of Trade and Comparative Advantage

Babe Ruth could produce two home runs in a week of play as a fielder or one win in a week of play as a pitcher. What was his opportunity cost for a week of pitching?

If instead of specialized doctors (neurologists, cardiologists, gastroenterologists, etc.) we had doctors who each knew the same things about all aspects of medicine, it would be:

Only a very small portion of people who use microwaves know how they work. This is an example of:

The points on the production possibilities frontier show the cost of the different goods that a country can produce.

Refer to the figure. A country needs 4 units of labor to produce one car and 3 units of labor to produce one boat, and the country has 120 units of labor. Which of the figures represents this country's PPF?

Although trade increases productivity, it decreases society's collective knowledge because people specialize in a very limited number of things.

An advantage to specialization is that it can decrease the average cost of production by concentrating on smaller-scale production.

Which statement is TRUE?

One of the outcomes of specialization is that it leads to _____, which _____ the average cost of production.

A rock carving from ancient Norway depicts two identical people doing different jobs in the same boat: one uses a bow to hunt while the other paddles. How does this early example illustrate the benefits of trade?

The production possibilities frontier's negative slope illustrates the notion of trade-offs-producing more units of one good reduces the amount of another good's production.

Adam Smith advocated the benefits of:

David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true?

Globalization is the advance of human cooperation across national boundaries.

James and Linda must prepare a presentation for their marketing class. As part of their presentation, they must do a marketing plan and prepare 40 PowerPoint slides. It would take James 5 hours to do the required plan and 5 hours to prepare the slides. It would take Linda 6 hours to do the plan and 10 hours to prepare the slides. a. How much time would it take the two to complete the project if they divide the writing of the marketing plan equally and the development of the slides equally? b. How much time would it take the two to complete the project if they use comparative advantage and specialize in writing the marketing plan or preparing slides? c. If James and Linda have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize?

Employing comparative advantage increases the total satisfaction with what's produced, but not the total amount of what's produced.

Use the following to answer questions: Figure: PPF Goods X & Y -(Figure: PPF Goods X & Y) Refer to the figure. Which of the points representing various consumption possibilities for the country portrayed above is only attainable through foreign trade?

Increased communication speed played a significant role in recent developments that led to increased trade and globalization?

Angela and Ed are married. Angela can do $40 worth of household chores per hour, and Ed can do $15 worth of household chores per hour. In the labor market, Ed can earn $30/hour and Angela can earn $40/hour. The theory of comparative advantage suggests that:

eBay creates value by: