Absolute and Comparative Advantage

Front

What is the opportunity cost of producing a car in the U.S. if the U.S. can produce 50 cars and 25 tools?

Back

.5 tools

Answer explanation

To find the opportunity cost of producing a car in the U.S., divide the tools that could be produced by the cars. The U.S. can produce 25 tools for 50 cars, so the cost of 1 car is 25 tools / 50 cars = 0.5 tools.

Front

Comparative advantages show:

Back

who should produce what item at the lowest cost

Answer explanation

Comparative advantages indicate which producer can create a good at the lowest opportunity cost, guiding decisions on what items should be produced to maximize efficiency and benefit from trade.

Front

What type of advantage shows who can make the most item?

Back

absolute advantage

Answer explanation

Absolute advantage refers to the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group. It shows who can produce the most items.

Front

Who has the absolute advantage for haircuts? Joy gives 2 haircuts and 1 perm. Susie gives 3 haircuts and 2 perms.

Back

Susie

Answer explanation

Susie gives 3 haircuts compared to Joy's 2. Since Susie can produce more haircuts in the same time frame, she has the absolute advantage in haircuts.

Front

Who has the absolute advantage for vacuuming?

Back

Joe

Answer explanation

Joe has the absolute advantage in vacuuming because he takes only 45 minutes compared to Ana's 60 minutes. The person who can perform a task in less time has the absolute advantage.

Front

Good and services produced at home and sold in other countries

Back

Exports

Answer explanation

Exports refer to goods and services produced domestically and sold to other countries. In contrast, imports are goods brought into a country from abroad. Therefore, the correct answer is exports.

Front

The ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity

Back

comparative advantage

Answer explanation

The correct choice is 'comparative advantage' because it refers to the ability to produce a good or service at a lower opportunity cost than another, allowing for more efficient economic activity compared to absolute advantage.

Front

The theory of specializing in what we can do fastest and cheapest is called

Back

absolute advantage

Answer explanation

The theory of absolute advantage refers to the ability of a party to produce a good more efficiently than another. It emphasizes producing what can be done fastest and cheapest, distinguishing it from comparative advantage.

Front

A focus on developing only certain skills or producing only certain goods/services

Back

Specialization

Answer explanation

Specialization refers to focusing on developing specific skills or producing particular goods/services, enhancing efficiency and productivity in those areas.

Front

True or False: It is better for countries to specialize and conduct trades given comparative advantage data.

Back

True

Answer explanation

True. Countries benefit from specializing in goods where they have a comparative advantage, leading to more efficient production and increased overall trade benefits.