Exam 2: The Power of Trade and Comparative Advantage

The production possibilities frontier shows all the combinations of goods that a country can produce given its productivity and supply of inputs.

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 pasta for Belgium is:

The wage rate in India is lower than the wage rate in the United States because Indian workers are more productive than U.S. workers.

Iceland produces two goods: Viking hats (Y) and fish (X). Its production possibilities frontier is characterized as: Y = 50 - 2X. What is the opportunity cost of producing a tenth Viking hat (i.e., going from a production level of nine Viking hats to a production level of 10 Viking hats)?

The fundamental idea behind the production possibilities frontier is:

Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because:

The recent pace of globalization has been increased through:

Use the following to answer questions: Table: Production in the United States and Germany Labor units required to produce: One Clock One Sofa United States 2 5 Germany 3 9 -(Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one clock in the United States is _________, and the opportunity cost of producing one clock in Germany is _______.

Trade leads to increased productivity because trade allows people to specialize.

Trade refers to the exchange of goods or services between two parties.

If the goal of education were solely to support economic growth, the ideal graduate would be a:

Which of the following best describes the principle of comparative advantage?

A country produces and consumes eight units of sugar cane costing $50 per unit and two iPods that cost $200 each. After specialization and trade, that country consumes eight units of sugar cane and four iPods. With 24 units of labor, what are wages in this country?

In many universities, graduate students are employed to teach introductory undergraduate courses, even though the full professors at these universities have more experience and could potentially teach these courses better. Which of the following best explains why universities choose to hire graduate students instead of full professors to teach their introductory courses?

In the time it takes Stanley to clean the bathroom he can make three cheesecakes. In the time it takes Fran to clean the bathroom she can make two cheesecakes. Fran has a comparative advantage in cleaning the bathroom.

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, Italy and Belgium both could benefit if Italy were to specialize in:

Which of the following statements is TRUE?

Trade tends to:

Figure: United States Production Possibility Frontier Suppose the figure illustrates the United States PPF for the production of corn and TVs. Which of the following statements is TRUE?

The slope of the production possibilities frontier at a given point indicates ______.