Exam 2: The Power of Trade and Comparative

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.

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. If each party produces according to his comparative advantage:

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?

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. The opportunity cost of producing Good X in Country A is _____ and in Country B it is _____ meaning that Country _____ should specialize in producing Good X and Country _____ in Good Y.

Use the following to answer questions: Table: iPhone and iPod Production One iPhone One iPod Canadian labor units 3 4 United States labor units 2 2 -(Table: iPhone and iPod Production) According to the table on iPhone and iPod production, which of the following is TRUE?

Specialization and the division of knowledge decreased with the fall of the Berlin Wall and the opening of China's economy to the world.

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

The principles of comparative advantage, specialization, and trade apply to: I. individuals. II. communities. III. regions. IV. nations.

Without trade, specialization is impractical.

The better a person is at producing one good:

Use the following to answer questions: Table: Production Possibilities for the United States and Mexico Corn (millions of tons) Potatoes (millions of tons) United States 50 10 Mexico 40 5 -(Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, the United States has an absolute advantage in ________ and a comparative advantage in _________.

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

Everyone, from the most to the least skilled to the most and least educated, can benefit from trade.

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 of a week of fielding?

As trade becomes more extensive, it slows down the creation of new ideas because fewer people can specialize in areas like science and engineering.

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 sofa in the United States is _________, and the opportunity cost of producing one sofa in Germany is _______.

Some countries have comparative advantages in everything.

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

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)?