A.A. vs C.A. (#1)

Front

When comparing two sets of resources, the one able to produce the most

Back

absolute advantage

Front

When comparing two sets of resources, the one able to produce at the lowest opportunity cost

Back

comparative advantage

Front

According to the principle of comparative advantage, on what does a country’s gains from international trade depend? Options: Its level of money wage rates compared to its trading partners, It imposing a higher level of tariffs compared to those of its trading partners, Its greater productive capacity in some goods compared to its trading partners, Its lower opportunity cost in the production of some goods compared to its trading partners

Back

Its lower opportunity cost in the production of some goods compared to its trading partners

Front

The key reason for division of labor, specialization of labor and international trade is

Back

comparative advantage

Front

The basis of comparison when determining division and specialization of labor/trade is

Back

opportunity cost

Front

Which nation has the absolute advantage in the production of cars?

Back

U.S.

Front

What is the opportunity cost of producing 1 tool in the U.S.?

Back

2 cars

Front

Which nation has the absolute advantage in tools?

Back

U.S.

Front

What is the opportunity cost of producing 1 car in the U.S.?

Back

1/2 tool (.5 tools)

Front

What is the opportunity cost of making 1 car in Peru?

Back

1/4 tool (.25 tools)