AP 1.3 Comparative Advantage

Multiple Choice

Which of the following would cause a parallel shift to the right of the production possibilities curve (PPC)?

• An increase in the productivity of labor with respect to producing good X

• An increase in the amount of labor available for production

• A reduction in the unemployment of labor

• An increase in the demand for good X and good Y

• A change in consumer tastes from good Y to good X

Multiple Choice

Who has absolute advantage in cars and textiles between the U.S. and China?

• U.S. in both cars and textiles

• China in both cars and textiles

• U.S. in cars, China in textiles

• China in cars, U.S. in textiles

Multiple Choice

Which of the following statements best describes comparative advantage?

• The ability to produce more of a good than another producer.

• The ability to produce a good at a lower opportunity cost than another producer.

• The ability to produce a good using fewer resources than another producer.

• The ability to trade more goods than another producer.

Multiple Choice

Based on the opportunity cost calculations, which country has the comparative advantage in kites and which in computers?

• Canada in both kites and computers

• Panama in both kites and computers

• Panama in kites, Canada in computers

• Canada in kites, Panama in computers

Multiple Choice

A professor hires two aides, assigning them the tasks of reading student papers and of typing lecture notes on a computer. One of the aides, Ben, can read 1 page of a student paper per minute or type 50 words of lecture notes per minute, and the other aide, Ann, can read 3 pages of a student paper per minute or type 60 words of lecture notes per minute. Which of the following statements is true?

• Ann has a comparative advantage in reading student papers, and Ben has a comparative advantage in typing lecture notes.

• Ann has an absolute advantage in reading student papers, and Ben has an absolute advantage in typing lecture notes.

• Ben has a comparative advantage in reading student papers, and Ann has a comparative advantage in typing lecture notes.

• Ben has a comparative advantage in both reading student papers and typing lecture notes.

• Ben has an absolute advantage in both reading student papers and typing lecture notes.

Multiple Choice

If Country A and Country B specialize and trade, Country A will:

• export wheat and import corn

• export corn and import wheat

• export both wheat and corn

• import both wheat and corn

• benefit more from trade than will Country B