Exam 2: The Power of Trade and Comparative Advantage

Which of the following statements is incorrect?

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?

Reference: Ref 2-9 (Figure: Countries A & B) Refer to the figure regarding countries A &B. If both countries depicted fully allocate all of their labor towards the good in which they have a comparative advantage, the combined production for the two countries would be _______ units of Good X, and _______ units of Good Y.

Traders should specialize in the good in which:

Economic growth in the modern era is primarily due to the creation of new:

Reference: Ref 2-5 (Table: Production Possibilities for the United States and Mexico) According to the table on Production Possibilities for the United States and Mexico, Mexico has an absolute advantage in ________ and a comparative advantage in _________.

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

Trade increases competition for domestic producers and results in lower prices of domestic goods.

Two countries that specialize in their comparative advantage and trade with each other will increase: I. wages in both countries. II. total output in both countries. III. living standards in both countries.

Suppose a famous baseball player, Alex Rodriguez, hires a high school student to paint his house. Which of the following is most likely TRUE?

Division of knowledge, as discussed in the text, increases economic prosperity because: I. Each person can develop extensive knowledge about a single activity. II. The human brain's capacity to know everything about all productive activities is limited. III. Specialized knowledge increases productivity, which increases total output.

Globalization is best described as:

The United States and the European Union are groups of semi- independent states that have come together under an agreement whereby resources can travel freely across borders and a common currency is in use. Which of the following statements best explains how this allows for the achievement of economies of scale?

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?

With 24 units of labor and no trade Brazil produces and consumes eight units of sugar cane and two iPods. Sugar cane costs $50/unit, and iPods cost $200. After specialization and trade, Brazil consumes 8 units of sugar cane and four iPods. What are wages in Brazil?

Utilizing comparative advantage can best be exemplified as:

Which of the following is NOT an outcome of trade?

The production possibilities frontier shows:

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. Which of the following statements is NOT true?

U.S. pharmaceutical companies sell drugs to Kenya, and Kenyan farmers sell flowers to the U.S. This pattern of trade suggests that the U.S. is the low-opportunity-cost producer of drugs and Kenya is the low-opportunity-cost producer of flowers.