Question 1

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.If the exchange rate between apples and oranges in international markets is 1 tonne of apples per 3 tonnes of oranges,how will this affect trade between Karl and Adam?

Accepted Answer

The answer of Table 14-3
Karl can produce either 10 tonnes...

Question 2

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 4 oranges?

Accepted Answer

The answer of Table 14-2
Alpha can produce either 18 oranges...

Question 3

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 2 oranges?

Accepted Answer

The answer of Table 14-2
Alpha can produce either 18 oranges...

Question 4

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.What are the opportunity costs of producing 1 orange for Alpha and Omega?

Accepted Answer

The answer of Table 14-2
Alpha can produce either 18 oranges...

Question 5

In Bangladesh,one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore,one person can produce 400 pounds of rice or 200 shirts in one year.What is the result?

Accepted Answer

Bangladesh has a lower opportunity cost of producing rice compared to shirts (1 pound of rice is worth less than 1 shirt), while Singapore has a lower opportunity cost of producing shirts compared to rice (1 shirt is worth less than 1 pound of rice). This means that Bangladesh has a comparative advantage in rice production, while Singapore has a comparative advantage in shirt production. Absolute advantage is not relevant in determining comparative advantage.

Question 6

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

Accepted Answer

The answer of If Samoa could produce either 3 coconuts...

Question 7

Table 14-1
Alternate Outputs from One Day's Labour Input:
Canada: 12 bushels of wheat or 3 yards of textiles
Great Britain: 3 bushels of wheat or 12 yards of textiles
-Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

Accepted Answer

According to table 14-1, in Great Britain, for producing 1 bushel of wheat, they have to give up producing 3 yards of textiles. Therefore, the opportunity cost of one bushel of wheat in Great Britain is 3 yards of textiles.

Question 8

In Samoa,the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam,the opportunity cost of producing 1 coconut is 5 pineapples.What can we conclude in this situation?

Accepted Answer

When trade occurs, countries can specialize in producing goods for which they have a lower opportunity cost and trade for others, allowing both to consume beyond their production possibilities frontiers.

Question 9

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

Accepted Answer

The answer of In Artland,the opportunity cost of producing 1...

Question 10

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

Accepted Answer

The answer of The opportunity cost of producing a pair...

Question 11

Table 14-1
Alternate Outputs from One Day's Labour Input:
Canada: 12 bushels of wheat or 3 yards of textiles
Great Britain: 3 bushels of wheat or 12 yards of textiles
-Refer to Table 14-1.What can we conclude about Canada?

Accepted Answer

Canada can produce more wheat per day than Great Britain, indicating an absolute advantage in wheat production.

Question 12

If two countries are each producing two goods and each country begins to specialize in the good in which it has a comparative advantage,what will happen to total (world)output?

Accepted Answer

By specializing in the goods in which they have a comparative advantage, each country can produce more efficiently and effectively. This results in an increase in total (world) output.

Question 13

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.Which of the following statements about Alpha and Omega is the most accurate?

Accepted Answer

The answer of Table 14-2
Alpha can produce either 18 oranges...

Question 14

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

Accepted Answer

Comparative advantage refers to the ability of a country to produce a particular good or service at a lower opportunity cost than another country. In this scenario, Canada can produce 100 hockey sticks or 10 gallons of maple syrup, while Germany can produce only 90 hockey sticks or 10 gallons of maple syrup in a week. This means that Canada has a comparative advantage in producing hockey sticks as it can produce more hockey sticks in a week compared to Germany.

Question 15

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.What terms of trade between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

Accepted Answer

The answer of Table 14-2
Alpha can produce either 18 oranges...

Question 16

Assume that one day's labour in England can produce either 20 units of cloth or 2 units of wine,while in Portugal one day's labour can produce either 24 units of cloth or 12 units of wine.If England transfers 2 units of labour from wine to cloth and Portugal transfers 1 unit of labour from cloth to wine,what will the increase in combined output by those two workers be?

Accepted Answer

England's 2 units of labor shift from wine to cloth results in 40 more cloth and 4 less wine. Portugal's 1 unit of labor shift from cloth to wine results in 12 more wine and 24 less cloth. Net change: 8 more wine (12-4) and 16 less cloth (40-24).

Question 17

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

Accepted Answer

Canada can produce more cars than France with the same amount of labor, indicating an absolute advantage in car production.

Question 18

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.What terms of trade between Karl and Adam would be mutually beneficial?

Accepted Answer

Both Karl and Adam have a comparative advantage in one of the two goods they can produce, therefore they could potentially benefit from trade. In order for trade to be mutually beneficial, the terms of trade should lie between the opportunity cost of production for each of them. For Karl, the opportunity cost of producing one tonne of oranges is to give up the production of 0.5 tonnes of apples, while for Adam, it is to give up the production of 2 tonnes of oranges. Therefore, the terms of trade should be between 0.5 and 2 oranges per apple. Among the given options, the only one that meets this requirement is B, with terms of trade of 1 apple per 1.5 oranges, which is between 0.5 and 2.

Question 19

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.Which of the following statements about trade is the most accurate?

Accepted Answer

Karl can produce 10 tonnes of oranges, which is more than Adam's maximum production of 5 tonnes. Therefore, Karl has an absolute advantage in oranges. In addition, Karl's opportunity cost of producing 1 tonne of apples is only 2 tonnes of oranges, while Adam's opportunity cost of producing 1 tonne of apples is 0.5 tonnes of oranges. This means that Karl has a lower opportunity cost in producing apples, giving him a comparative advantage in oranges as well.

Question 20

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.What exchange rate results in mutually beneficial trade between Karl and Adam?

Accepted Answer

The answer of Table 14-3
Karl can produce either 10 tonnes...

Quiz 14: International Trade

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 4 oranges?

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 2 oranges?

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.What are the opportunity costs of producing 1 orange for Alpha and Omega?

In Bangladesh,one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore,one person can produce 400 pounds of rice or 200 shirts in one year.What is the result?

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

Table 14-1 Alternate Outputs from One Day's Labour Input: Canada: 12 bushels of wheat or 3 yards of textiles Great Britain: 3 bushels of wheat or 12 yards of textiles -Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

In Samoa,the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam,the opportunity cost of producing 1 coconut is 5 pineapples.What can we conclude in this situation?

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

Table 14-1 Alternate Outputs from One Day's Labour Input: Canada: 12 bushels of wheat or 3 yards of textiles Great Britain: 3 bushels of wheat or 12 yards of textiles -Refer to Table 14-1.What can we conclude about Canada?

If two countries are each producing two goods and each country begins to specialize in the good in which it has a comparative advantage,what will happen to total (world) output?

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.Which of the following statements about Alpha and Omega is the most accurate?

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.What terms of trade between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

Table 14-3 Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples. -Refer to Table 14-3.What terms of trade between Karl and Adam would be mutually beneficial?

Table 14-3 Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples. -Refer to Table 14-3.Which of the following statements about trade is the most accurate?

Table 14-3 Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples. -Refer to Table 14-3.What exchange rate results in mutually beneficial trade between Karl and Adam?