Exam 2: The Power of Trade and Comparative

The economist credited with saying, "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," is Adam Smith.

The main reason why specialization can raise productivity is that:

According to the textbook, globalization:

Use the following to answer questions: Figure: Rice and Shirts -(Figure: Rice and Shirts) Use the PPFs shown for the United States and India. With specialization and trade, the United States would produce ________ and India would produce _________.

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.

A country has an absolute advantage if it can produce _______ good using _____ inputs than another country.

Countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

eBay creates value by:

If labor in China is less productive than labor in the United States in all areas of production, then:

In many universities, graduate students are employed to teach introductory undergraduate courses, even though the full professors at these universities have more experience and could potentially teach these courses better. Which of the following best explains why universities choose to hire graduate students instead of full professors to teach their introductory courses?

To benefit from trade, a country must have the absolute advantage in producing its traded good.

Brazil and Canada trade two goods: bananas and ice pops. Brazil has a comparative advantage in banana production. This means that:

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. Conan's opportunity cost of rehearsing and hosting a show is:

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?

When a rich country that has absolute advantages in all products begins trading with a poor country:

Trade works best between people who share similar preferences.

When economists say that an individual or country has the comparative advantage in the production of a good, it means that they:

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?

Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. Which of the following is TRUE?

Which of the following best describes the principle of comparative advantage?