Exam 2: The Power of Trade and Comparative Advantage

A country has an absolute advantage if it can produce _______ good using _____ inputs than another country.

The ability of one producer to produce one good or service using fewer inputs than another producer is:

Specialization is an example of self-interest aligning with the social interest because it increases the amount you can consume as well as the amount society can consume.

Which of the following best characterizes the relationship between the parties to a trade and the gains from trade?

Trade refers to the exchange of goods and services between at least two different nations.

Use the following to answer questions: Figure: Countries A and B -(Figure: Countries A and B) Refer to the figure regarding countries A and B. If each country allocated half of its labor force to the production of each good before trade and were to then each specialize in their comparative advantage and allocate 75 percent of its labor force to the production of that good, world production of Good X would change by _____ and the production of Good Y by _____.

A country or individual that is best at doing something should always undertake that activity to maximize gains from trade.

Suppose the United States is more productive than China at making both T-shirts and cell phones. The theory of comparative advantage suggests that consumption in both countries will:

What is the difference between trade among individuals and trade among nations?

Absolute advantage is the ability to produce a:

Traders should specialize in the good: that:

Division of knowledge refers to:

Involuntary trades increase value in the same way voluntary trades do.

Use the following to answer questions: Figure: Steel and Lumber -(Figure: Steel and Lumber) In the PPF diagram, China has a comparative advantage in ________ and an absolute advantage in _______.

To benefit the most from trade, a person should:

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?

Trade creates value by moving goods from people that value them less to people that value them more.

In a certain country it takes five of its 10 workers to produce one barrel of wine but only one worker to produce one yard of cloth. If we graphed this country's PPF (placing wine on the vertical axis and cloth on the horizontal axis), the slope of the PPF would equal -1/5.

If Joyce can gather 15 logs a day or catch 10 fish a day and Percy can gather five logs a day or catch five fish a day, then Percy has a comparative advantage in gathering fish.

In 2010, Switzerland-based Nestlé began sailing supermarket barges up and down parts of the Amazon River. The barges carry approximately 300 different goods and cater to about a dozen local communities that fish the Amazon's bountiful rivers and whose members lack the time and money to visit a conventional store. Which advantage from trade is illustrated in this passage?