Exam 3: Comparative Advantage and the Production Possibilities Frontier

Consider the data in the following table. -Referring to the table above, Country A has a comparative advantage in the production of:

The slope of a country's social indifference curve is called:

Suppose that a country can convert wheat into textiles at a ratio of 3W = 1T. If the country could trade at 2.9W = 1T, it would be better off not trading. Explain why this statement is true or false.

The terms of trade between any two countries for two goods must lie between their respective opportunity costs if both countries are to gain from trade.

Consider the data in the following table. -Referring to the table above, Country A has an absolute advantage in the production of:

International trade allows a country to consume outside its production possibilities frontier.

If a country is subject to increasing costs, then its production possibilities frontier is:

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day. -Canada has a comparative advantage in the production of peanut butter.

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day. -The cost of skateboards in terms of peanut butter in Canada is 1SB=2PB.

If the U.S. export price index is 120 and its import price index is 105, its terms of trade is:

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day. -Canada has a comparative advantage in the production of skateboards.

The terms of trade (TOT) are:

A rough indication of a country's terms of trade is the export price index divided by the import price index times 100.

The limits to mutually beneficial trade are determined by:

Consider the data in the following table. -Referring to the table above, mutually beneficial trade will occur between the two countries so long as a computer trades for:

If Japan's economy is subject to constant costs, then its supply curve of automobiles will be:

If two countries are of unequal size:

Consider the data in the following table. -Referring to the above table, Country A gains most from trade if a computer trades for:

The concept of reciprocal demand suggests that:

Consider the data in the following table. -Referring to the table above, Country B has a comparative advantage in the production of: