Comparative & Absolute Advantage

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.

Which country has the absolute advantage in producing airplanes?

• Japan

• US

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.

Which country has the comparative advantage in producing trucks and what is their opportunity cost?

• Japan, 1/3 airplane per truck

• US, 1/2 airplane per truck

• US, 2 airplanes per truck

• Japan, 3 airplanes per truck

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing airplanes and what is their opportunity cost? 

• Japan, 1/3 trucks per airplane
• US, 1/2 trucks per airplane
• US, 2 trucks per airplane
• Japan, 3 trucks per airplane

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
If the terms of trade are set to 2 trucks in exchange for 1 airplane, and trade is established based on comparative advantage, which country gains more than they would have been able to produce without trade?
 

• Japan
• US

The US can produce 1 ton of sugar using 4 acres of land, or they can produce 1 ton of avocados using 6 acres. 
Ecuador can produce 1 ton of sugar using 5 acres of land or 1 ton of avocados using 4 acres. 
Which country should produce avocados? 

• Ecuador
• US
• not enough information

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

• Imports
• Exports
• Specialization
• Globalization

When one person or group depends on or relies on another

• Import 
• Specialization
• Interdependent
• Export

Good and services produced at home and sold in other countries

• Imports
• Exports
• Specialization
• Globalization

The U.S. can produce 10 ipads or 20 phones.  China can produce 20 ipads or 30 phones. Who should produce what?

• U.S.-ipads
  China- phones
• U.S. phones
  China- ipads
• both should produce ipads
• they should not specialize

Why are most countries better off specializing in the production of particular goods, and then trading with other nations to obtain whatever else they need? 

• Transportation costs are lower than they were a century ago.
• Resources are not evenly distributed among countries.
• Greater investment of capital goods increases productivity.
• People have limited resources to satisfy unlimited wants.