Exam 2: The Power of Trade and Comparative

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. Andy's opportunity cost of writing a single usable joke is:

The concept of comparative advantage implies that:

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?

Evidence from history shows that when the extent of trade expands, the result is prosperity.

One of the ways trade increases wealth is by taking advantage of differences in preferences.

In his prime, Michael Jordan played both professional basketball and professional baseball. Compared with most people, Jordan would have an absolute advantage in:

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. If both countries fully allocate all of their labor toward 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.

Use the following to answer questions: Figure: Comparative Advantage -When countries produce those goods for which they have a comparative advantage:

A country has a comparative advantage in a good if:

Which of the following is TRUE regarding trade and wages?

The human brain has no limits, so the division of knowledge decreases the total knowledge in society.

On a production possibilities frontier a trade-off can be illustrated as:

Increased trade has also led to:

The reason why Martha Stewart does not iron her own clothes is that:

Adam Smith said, "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor." Which of the following concepts best illustrates Smith's intent with this statement?

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?

Brazil and Canada trade two goods: bananas and ice pops. Brazil has a comparative advantage in banana production. From this, we know that:

Trade makes people better off only when they all have the same preferences.

Without trade, the knowledge used by an entire economy would be about the same as the knowledge had by:

Absolute advantage derives from which of the following?