Absolute and Comparative Advantage

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

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

• Imports
• Exports
• Specialization
• Globalization

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

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. 

The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?

• If Country Y is producing at point C, it is using all its resources efficiently
• The opportunity cost of producing more machines is constant
• Country Y cannot produce at point E
• The most efficient point of production is point D

Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?

• Sam has an absolute advantage in making blankets
• Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets
• Sam has a comparative advantage in making blankets
• Sam has a comparative advantage in knitting sweaters

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

Lana can bake 10 cakes in 8 hours, while Lenny can bake 4 cakes in 8 hours. Lenny has an Absolute Advantage in making cakes.

• True
• False

The country of Rockonya makes 1 television every 5 hours and 1 car every 20 hours, while the country of Jamonia makes 1 television every 24 hours and 1 car every 12 hours. Rockonya has a Comparative Advantage in making televisions.

• True
• False