Year 12 Econ Trade protection revision

Because the Earth’s resources are not evenly distributed across its surface —

• global economic interdependence is declining.

• most countries have the resources they need to survive and grow.

• countries must engage in trade to get the goods they need to survive.

• most people in the world are engaged in tertiary economic activities.

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

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 should do the vacuuming

• Ana

• Joe

Which one of the following options correctly identifies the distinction between comparative and absolute advantage

• A

• B

• C

• D

The table shows the maximum possible output of two countries producing only two goods - mobile phones and laptops. Which one of the following statements is true

• Country A has an absolute advantage in producing both mobile phones and laptops

• Country A has a comparative advantage in producing laptops because it only has to give up 1 mobile phone in order to produce an additional laptop, whereas Country B has to give up 7 mobile phones to produce an additional laptop

• Country A has a comparative advantage in producing laptops because it is 6 times as efficient as Country B at producing laptops and is only 1.67 times as efficient than country B at producing mobile phones

• Country B has a comparative advantage in producing mobile phones because it is 0.86 times as efficient as Country A at producing mobile phones but only 1.67 times as efficient as Country A at producing laptops

The quantity of two goods produced by both countries when they divide their resources equally between the two goods is shown below. Which of the following statements is correct?

• Country X has an absolute advantage in computers

• Country X has a comparative advantage in bikes

• Trade would benefit Country Y but not Country X

• Trade would not benefit either country

Two countries are involved in the production of cars and bananas. If they each decided to use half of their resources on the production of each of the products, they would produce the quantities in the first table: Which combination of output represents world output of each good if both countries fully exploited their comparative advantage?

• A

• B

• C

• D

According to the principle of comparative advantage, on what does a country’s gains from international trade depend?

• Its level of money wage rates compared to its trading partners

• It imposing a higher level of tariffs compared to those of its trading partners

• Its greater productive capacity in some goods compared to its trading partners

• Its lower opportunity cost in the production of some goods compared to its trading partners

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 simplified production possibilities curves for country A and B are shown. Which one of the following statements is correct?

• Country A has the comparative advantage in both goods
• Country A has the comparative advantage in chairs & Country B has the comparative advantage in shirts
• Country B has the absolute advantage in shirts only
• Country A has the comparative advantage in shirts & Country B has the comparative advantage in chairs