Exam 2: The Power of Trade and Comparative

A country or individual that is best at doing something should always undertake that activity to maximize gains from trade.

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.

Trade creates value because:

Wage rates are primarily based on the:

Use the following to answer questions: Figure: Comparative Advantage -(Figure: Comparative Advantage) The figure illustrates both the U.S. and Japanese production possibilities frontiers for TVs and wheat. Based on this information, which of the following is TRUE?

Babe Ruth could produce two home runs in a week of play as a fielder or one win in a week of play as a pitcher. What was his opportunity cost for a week of pitching?

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 rehearsing and hosting a show is:

Division of knowledge refers to:

Angela and Ed are married. Angela can do $40 worth of household chores per hour, and Ed can do $15 worth of household chores per hour. In the labor market, Ed can earn $30/hour and Angela can earn $40/hour. The theory of comparative advantage suggests that:

Some countries have comparative advantages in everything.

Absolute advantage is the ability to produce a:

Specialization in its comparative advantage and trading with other nations benefits a country in terms of its total output, but not individuals when it comes to their wages.

If the goal of education were solely to support economic growth, the ideal graduate would be a:

Trades are considered zero-sum transactions since when one person gains, the other loses an equal amount.

Use the following to answer questions: Figure: PPF Nickel & Textiles -(Figure: PPF Nickel & Textiles) Refer to the figure. How many tons of textiles does Australia give up to produce one ton of nickel?

Large cities should have more professional closet organizers than small cities.

According to the theory of comparative advantage, a country specializes in producing goods with lower opportunity costs than in another country.

Fourteenth-century potters in the Chinese city of Jingdezhen developed the technology to heat a kiln at 1,300 degrees Celsius and produce porcelain, or "china," which was particularly popular in Persia where the Koran forbade serving food on gold or silver and wealthy families were anxious for a legal way to impress their dinner guests. The potters also imported Persian cobalt to create the blue dye for the porcelain (local cobalt was not as bold in color). Which advantage(s) from trade is(are) illustrated in this passage?

Both Maria and Jorge bake cookies and bread, but Maria spends less time baking each batch of cookies and each loaf of bread than Jorge does. Which of the following is TRUE?

Each of 100 people receives a random item from a grocery store and assigns it a value between 1 (low) and 10 (high). They trade those items among themselves for items they prefer rather than those they randomly received and then assign a second value (again, 1 to 10) to the item that they end up with after the trading concludes. How would the sum of those values before trading compare with the sum after trading?