SOLVED

19.2  Comparative Advantage in International Trade 1) Absolute advantage is A) the ability to produce more of a good or service than competitors when using the same amount of resources. B) the ability to produce higher quality goods compared to one’s competitors. C) the ability to produce a good or service at a higher opportunity cost than one’s competitors. D) the ability to produce more of a good or service than competitors that have more resources. 2) ________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors. A) Absolute advantage B) Specialization C) Autarky D) Comparative advantage     3) Refer to Table 19-1. Select the statement that accurately interprets the data in the table. A) Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. B) Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. C) Sandy has an absolute advantage in dog bathing and dog grooming. D) Linda has an absolute advantage in dog bathing and dog grooming. 4) Refer to Table 19-1. Select the statement that accurately interprets the data in the table. A) Sandy has a greater opportunity cost than Linda for dog grooming. B) Sandy’s opportunity cost for dog grooming is less than Linda’s. C) Linda has a greater opportunity cost than Sandy for dog bathing. D) Sandy’s opportunity cost for dog grooming and dog bathing are both greater than Linda’s. 5) Refer to Table 19-1. Select the statement that accurately interprets the data in the table. A) Sandy has a comparative advantage in dog grooming. B) Linda has a comparative advantage in dog grooming. C) Linda has a comparative advantage in dog grooming and dog bathing. D) Sandy has a comparative advantage in dog bathing. 6) Refer to Table 19-1. Select the statement that accurately interprets the data in the table. A) Linda has a comparative advantage in dog bathing. B) Sandy has an absolute advantage in dog bathing. C) Sandy has a comparative advantage in dog bathing. D) Linda has a comparative advantage in dog grooming and dog bathing. 7) An economic principle that explains why countries produce different goods and services is A) absolute advantage. B) trade as a percentage of GDP. C) comparative advantage. D) NAFTA. 8) Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that A) China also has an absolute advantage in producing corn relative to Japan. B) China has a lower opportunity cost of producing corn relative to Japan. C) Japan has an absolute disadvantage in producing corn relative to China. D) Labor costs are higher for corn producers in Japan than in China. 9) Whenever a buyer and a seller agree to trade, A) the agreement is made based on absolute advantage. B) they must have identical opportunity costs in producing their respective products. C) one party will always be worse off. D) both must believe they will be made better off. 10) If Japanese workers are more productive than French workers then trade between Japan and France A) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. B) cannot take place because Japanese goods and services will be less expensive than French goods and services. C) cannot take place until French workers become more productive. D) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.