01:220:102 Lecture Notes - Lecture 8: Demand Curve, Protectionism, Endangerment

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apricotherring648

3 Apr 2016

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01:220:102 Full Course Notes

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Loss/gain: the basis for trade: comparative advantage, comparative advantage - ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other producers i. To determine who has a comparative advantage is to compare individual opportunity costs: specialization i. Terms of trade - negotiated exchange rate of goods for goods. The gains to trade shrink as trading partners become more alike: trade between states, export - any good that is produced domestically but sold abroad b. Import - any good that is produced abroad but sold domestically: economy-wide ppc i. ii. As you move resources increasingly into production of one good, the opportunity cost of doing so increases at an increasing rate. Importing nations: winners and losers: when a country opens itself to trade and becomes an importer of goods sellers lose and buyers win, where do world prices come from? i.

Related Questions

The law of comparative advantage states that:

a. each country should specialize in producing the good with the lowest opportunity cost.

b. a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.

c. international trade barriers slow the introduction of new goods and better technologies.

d. countries can gain from trade if production is subject to economies of scale.

e. countries must agree on how much of one good exchanges for another.

turquoiseferret638

1. The law of comparative advantage says that:

A. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good.

B. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good

C. the individual with the lowest opportunity cost of producing a particular good should produce it

D. comparative advantage exists only when one person has an absolute advantage in the production of two goods

2. A country has an absolute advantage in the production of a good if that country:

A. can produce good using fewer resources than another country would require

B. has the lowest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

C. has the greatest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

D. has the lowest opportunity cost of producing the good and can produce it with the fewest resources

3. A production possibilities frontier can shift outward for all of the following reasons except:

A. a larger workforce

B. a decrease in the size of the labor force

C. an increase in the skills of the labor force

D. an improvement in technology

byzantiumshark504

(1) Implicit costs are the opportunity costs of using the resources of ---------------------------------------------

a. outsiders.

b. banks.

c. retained earnings.

d. owners.

(2) The Principle of Comparative Advantage implies that:

a. Two countries can benefit from trade only if one country is better at producing a good compared to another in absolute terms.

b. Two countries can benefit from specialization and trade even if one country is better at one good compared to another in absolute terms.

c. all countries should specialize in whatever they have a higher opportunity cost to producing.

d. all countries are better off when each produces all goods for themselves and they do not trade with each other.

(3) Points inside a production possibilities frontier represent

a. unemployment of resources

b. unattainable production combinations

c. efficient use of resources

d. supply exceeds demand

(4) In a free market --------------------------------

a. governments intervene

b. governments plan production

c. governments interfere

d. prices adjust to reconcile scarcity and desires

crimsonmarten898

01:220:102 Lecture Notes - Lecture 8: Demand Curve, Protectionism, Endangerment

01:220:102 Full Course Notes

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