Comparative/Absolute Advantage

When one country is good at producing in a particular commodity, they have a(n) _____ .

• Comparative advantage

• Complete specialization

• Absolute advantage

• None of the above

The basis of trade based from the lowest opportunity cost is considered as ____.

• Factor Endowment

• Adam Smith Theory

• Comparative Advantage

• Absolute Advantage

Identify the basis of trade of the following table:

• Malaysia has comparative advantage in Cloth

• Malaysia has absolute advantage in Cloth production

• Japan has comparative advantage in Car

• Japan has absolute advantage in Cloth

An opportunity cost can be define as second best alternative that have to let go....

• True

• False

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

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

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

A nation has this type advantage when it can produce a good at a lower opportunity cost than another person or nation.

• Absolute Advantage
• Comparative Advantage
• Complete Advantage
• Controlling Advantage

The U.S. can produce 50 cars and 25 tools. Peru can produce 20 cars and 15 tools. Who has the absolute advantage in tools?

• Peru

• U.S.

• neither

• not enough info

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?

• A. Alland has an absolute advantage in producing food but will not trade with Georgeland.
• B. Alland has a comparative advantage, but not an absolute advantage, in producing food.
• C. Georgeland has both a comparative and absolute advantage in producing clothing.
• D. Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.