Absolute & Comparative Advantage

The producer that can produce the most output OR requires the least amount of inputs (resources)

• Comparative Advantage

• Trade Offs

• Absolute Advantage

• Opportunity Cost

The producer with the lowest opportunity cost.

• Comparative Advantage

• Trade Off

• Absolute Advantage

• Opportunity Cost

Based on the table provided, which one of the following statements is correct?

• Japan has the absolute advantage in producing cars

• Japan has the comparative advantage in producing cars

• The United States has the absolute advantage in producing both cars and computers

• The opportunity cost of producing a car in Japan is 1/2 a computer

The rate at which goods are exchanged for one another in the international market is called ____

• The exchange rate

• An absolute advantage

• Terms of trade

• A comparative advantage

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

• Joy

• Susie

Ana takes 30 minutes to wash the dishes and one hour to vacuum the house. Her husband, Joe, takes 15 minutes to wash the dishes and 45 minutes to vacuum. Who has the absolute advantage for vacuuming?

• Ana

• Joe

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

Who has the comparative advantage in cake production?

• Sarah
• Mari

The U.S. can produce 50 cars and 25 tools. Peru can produce 20 cars and 15 tools. What is the opportunity cost of producing a car in the U.S.?

• .5 tools

• .5 cars

• .75 cars

• 1.3 tools

From the last question, who has the absolute advantage in tools?

• Peru

• U.S.

• neither

• not enough info