Exam 3: Interdependence and the Gains From Trade

Trade allows a country to consume outside its production possibilities frontier.

What should a country do if it has a comparative advantage in a product?

-Refer to the table. What is the opportunity cost of one basket for Alberta?

What is David Ricardo known for?

-Refer to Table 3-3. What is the opportunity cost of one sweater for Kevin?

Some countries win in international trade, while other countries lose.

Suppose a producer can produce shirts with lower opportunity cost than jeans. What else do we need to know if we want to determine this producer's comparative advantage?

If there is no trade, which of the following is most likely?

Regan grows flowers and makes vases. Jayson also grows flowers and makes vases, but Regan is better at producing both. Who has an absolute or comparative advantage in what activity?

-Refer to Table 3-5. What is the opportunity cost of one unit of cheese in Italy?

-Refer to Table 3-5. Which country has an absolute or comparative advantage in each product?

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 6 tables or 18 chairs, where Sandy can make 5 tables or 25 chairs. What is the opportunity cost of 1 chair?

What economic concept is the most relevant when defining comparative advantage?

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 6tables or 18 chairs, where Sandy can make 5 tables or 25 chairs. What is the opportunity cost of 1 table?

-Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the rancher?

Which statement does NOT accurately outline an implication of our model of trade?

For two people who are planning to trade two different goods, when will there NOT be a comparative advantage for either?

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what could Canada gain from importing a car?

Figure 3-4 -Refer to Figure 3-4. For Ben, what is the opportunity cost of one bottle of beer?

Figure 3-3 Ice cream and cones are measured in kilograms. -Refer to Figure 3-3. What does each of the two producers have a comparative or absolute advantage in?