Exam 2: The Power of Trade and Comparative Advantage

Use the following to answer questions: Table: Production Possibilities for Italy and Belgium Labor Hours Needed to Make One Pound of: Pounds produced in hours: Linen Pasta Linen Pasta Italy 10 4 4 10 Belgium 2 8 20 5 -(Table: Production Possibilities for Italy and Belgium) According to the table on production possibilities for Italy and Belgium, the opportunity cost of 1 pound of linen for Belgium is:

Jim has an old (working) television that he would like to get rid of now that he has purchased a new high-definition, flat-screen television. The old television is no longer worth anything to him now that he has his new flat-screen TV. Veronica on the other hand has an even older television that has just broken down. She would pay up to $50 for any working TV. If Jim trades Veronica his old television for $50, both are better off but total value in society does not increase.

Gains from trade are largest when two parties are similar in terms of opportunity costs of production.

Comparative advantage is determined by which of the following?

In the Star Trek: Deep Space Nine episode "Treachery, Faith, and the Great River," one of the characters is attempting to repair a spaceship. This is a critical job since there's a war going on, but the war is making it difficult to get the needed parts. An alien named Nog explains how he could obtain them by navigating the Great Material Continuum. He explains: It binds the universe together . . . there are millions upon millions of worlds in the universe, each one filled with too much of one thing and not enough of another. And the Great Continuum flows through them all, like a mighty river, from "have" to "want" and back again. And if we navigate the Continuum with skill and grace, our ship will be filled with everything our hearts desire. Identify which of the major themes of trade this passage about the Great Material Continuum highlights and explain how it works.

Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that:

To benefit from trade, a country must have the absolute advantage in producing its traded good.

The production possibilities frontier shows:

Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. Which of the following is TRUE?

Use the following to answer questions: Figure: PPF Goods X & Y -(Figure: PPF Goods X & Y) Refer to the figure. Point A represents an allocation of resources that is:

Conan O'Brien hosts the Conan show and Andy Richter, his sidekick, writes for it. Conan needs 4 hours to rehearse and host a good show. It takes Andy 10 hours to do the same. Conan writes one usable joke in an hour, but Andy needs 2 hours to do the same. Andy's opportunity cost of rehearsing and hosting a show is:

Facilitators of trade (such as Pierre Omidyar, the developer of eBay):

Evidence from history shows that when the extent of trade expands, the result is prosperity.

Fourteenth-century potters in the Chinese city of Jingdezhen developed the technology to heat a kiln at 1,300 degrees Celsius and produce porcelain, or "china," which was particularly popular in Persia where the Koran forbade serving food on gold or silver and wealthy families were anxious for a legal way to impress their dinner guests. The potters also imported Persian cobalt to create the blue dye for the porcelain (local cobalt was not as bold in color). Which advantage(s) from trade is(are) illustrated in this passage?

The U.S. interstate highway system probably allowed more people in small communities to become full-time interior decorators.

Knowledge increases ____________ and specialization __________ total output.

Use the following to answer questions: Figure: Comparative Advantage -(Figure: Comparative Advantage) The figure illustrates both the U.S. and Japanese production possibilities frontiers for TVs and wheat. Based on this information, which of the following is TRUE?

The development of shipping containers enabled companies to move freight quickly between ships, trucks, and trains by loading a single large container with many different goods and then moving the container. Before the container, freight had to be loaded and unloaded one palette, barrel, or box at a time. What impact did the shipping container have on globalization? Why?

Jesse is good at math and excellent at making friends and Addae is equally good at both. Mathematically and socially challenged Jordan wants to hire tutors to help in each area. Who should tutor Jordan in which area to maximize Jordan's college experience?

Phil can clean and polish silverware in two hours and change spark plugs in a car in four hours. Betty can clean and polish the same silverware in 1 hour and change spark plugs in a car in 1 hour. Phil does not have a comparative advantage in either activity.