Question 1

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. _______ has the comparative advantage in TVs and _______ has the comparative advantage in radios.

Accepted Answer

Since Rich's opportunity cost of producing a TV is less than Jen's (3 radios < 5 radios), Rich has the comparative advantage in producing TVs. Similarly, since Jen's opportunity cost of producing radios is less Rich's (1/5 of a TV < 1/3 of a TV), Jen has the comparative advantage in producing radios.

Question 2

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one car is _____ pounds of cheese.

Accepted Answer

In the time it takes Amy to produce 1 car, she can produce 5000/20 = 250 pounds of cheese.

Question 3

If the price of a good in a closed economy is greater than the world price, then if the country opens its markets to world trade the country will be a ______ of that good.

Accepted Answer

If the price of a good or service in a closed economy is greater than the world price, and that economy opens itself to trade, the economy will tend to become a net importer of that good or service.

Question 4

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one radio?

Accepted Answer

In the time it takes Jen to produce 10 radios, she could have produced 2 TVs, so for every radio she produces, she gives up 1/5 of a TV.

Question 5

The world price of a good is determined by the

Accepted Answer

The world price of a good is determined by the worldwide supply and demand for that good.

Question 6

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one pound of cheese is ______ car(s).

Accepted Answer

In the time it takes Mike to produce 1 car, he can produce 10/5000 = 1/500 pounds of cheese.

Question 7

The United States imports shoes from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be _____ the world price of shoes.

Accepted Answer

If the price of a good or service in a closed economy is greater than the world price, and that economy opens itself to trade, the economy will tend to become a net importer of that good or service.

Question 8

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one pound of cheese is ______ car(s).

Accepted Answer

In the time it takes Amy to produce 1 pound of cheese, she can produce 20/5000 = 1/250 cars.

Question 9

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one radio?

Accepted Answer

In the time it takes Rich to produce 12 radios, he could have produced 4 TVs, so for every radio he produces, he gives up 1/3 of a TV.

Question 10

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing

Accepted Answer

Amy's opportunity cost of producing cars is lower than is Mike's (250<500), while Mike's opportunity cost of produce cheese is lower than is Amy's (1/500<1/250). So Amy has a comparative advantage in cars, and Mike has a comparative advantage in cheese. This implies that Amy should specialize in producing cars and Mike should specialize in producing cheese.

Question 11

The price at which a good or service is traded on international markets is called the ________ price.

Accepted Answer

The world price is the price at which a good or service is traded on international markets.

Question 12

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. If both Amy and Mike produce the good in which they have comparative advantage, the total annual output of this economy will be _______.

Accepted Answer

Amy's opportunity cost of producing cars is lower than is Mike's (250<500), while Mike's opportunity cost of produce cheese is lower than is Amy's (1/500<1/250). So Amy has a comparative advantage in cars, and Mike has a comparative advantage in cheese. If Amy specializes in producing cars, then she can produces 20 cars per year, and if Mike specializes in producing cheese, then he can produce 500 pounds of cheese per year.

Question 13

If a country is a net importer of a good, domestic suppliers will supply _____ of that good after it opens itself to international trade.

Accepted Answer

If an economy becomes a net importer of a good after opening itself up to trade, then domestic production of that good will be lower compared to when the economy was closed.

Question 14

The United States imports garments from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be _____ the world price of garments.

Accepted Answer

If the price of a good or service in a closed economy is greater than the world price, and that economy opens itself to trade, the economy will tend to become a net importer of that good or service.

Question 15

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing

Accepted Answer

Amy's opportunity cost of producing cars is lower than is Mike's (250<500), while Mike's opportunity cost of produce cheese is lower than is Amy's (1/500<1/250). So Amy has a comparative advantage in cars, and Mike has a comparative advantage in cheese. This implies that Amy should specialize in producing cars and Mike should specialize in producing cheese.

Question 16

An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the most of each type that can be produced per day if each worker fully specializes according to his/her comparative advantage?

Accepted Answer

Rich has a comparative advantage in TVs, and Jen has a comparative advantage in radios. If Rich specializes in producing TVs, then he can produce 4 per day, and if Jen specializes in producing radios, then she can produce 10 per day.

Question 17

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one car is ______ pound(s) of cheese.

Accepted Answer

In the time it takes Mike to produce 1 car, he can produce 5000/10 = 500 pounds of cheese.

Question 18

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?

Accepted Answer

In the time it takes Rich to produce 4 TVs, he could have produced 12 radios, so for each TV he produces, he gives up 3 radios.

Question 19

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy has a comparative advantage in producing _____, and Mike has a comparative advantage in producing ______.

Accepted Answer

Amy's opportunity cost of producing cars is lower than is Mike's (250<500), while Mike's opportunity cost of produce cheese is lower than is Amy's (1/500<1/250). So Amy has a comparative advantage in cars, and Mike has a comparative advantage in cheese.

Question 20

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. To maximize total output, Jen should specialize in producing _____ while Rich should specialize in producing _______.

Accepted Answer

To maximize total output, each should specialize in producing the good at which he/she has a comparative advantage. Rich has a comparative advantage in TVs, and Jen has a comparative advantage in radios.

Quiz 3: International Trade and Trade Policy

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. _ has the comparative advantage in TVs and _ has the comparative advantage in radios.

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one car is _____ pounds of cheese.

If the price of a good in a closed economy is greater than the world price, then if the country opens its markets to world trade the country will be a ______ of that good.

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one radio?

The world price of a good is determined by the

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one pound of cheese is ______ car(s) .

The United States imports shoes from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be _____ the world price of shoes.

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one pound of cheese is ______ car(s) .

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one radio?

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing

The price at which a good or service is traded on international markets is called the ________ price.

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. If both Amy and Mike produce the good in which they have comparative advantage, the total annual output of this economy will be _______.

If a country is a net importer of a good, domestic suppliers will supply _____ of that good after it opens itself to international trade.

The United States imports garments from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be _____ the world price of garments.

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing

An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the most of each type that can be produced per day if each worker fully specializes according to his/her comparative advantage?

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one car is ______ pound(s) of cheese.

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?

Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Amy has a comparative advantage in producing _, and Mike has a comparative advantage in producing __.

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. To maximize total output, Jen should specialize in producing _ while Rich should specialize in producing ___.