economics ch.3

absolute advantage

the ability to produce a god using fewer inputs than another producer o

example of absolute advantage

this is an example of what:

ruby can produce an ounce of meat in 20 and an ounce of potatoes in 10 minutes. While frank takes 60 minutes to produce an ounce of meat and 15 minutes to produce an ounce of potatoes

opportunity cost

whatever must be given up to obtain some item

example of opportunity cost

this is an example of what:

it takes ruby 10 mins to produce an ounce of potatoes and 20 mins to produce an ounce of meat. The 10 mins to produce potatoes takes away ½ ounce to produce meat

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

imports

goods produced abroad and sold domestically

exports

goods produced domestically and sold abroad

other nations have an comparative advantage

nation will typically import goods in which

a. the nation has an absolute advantage

b. the nation has a comparative advantage

c. other nations have an absolute advantage

d. other nations have a comparative advantage

china will export shirs, and the united states will export aircraft

suppose that in the United States, producing an aircraft takes 10,000 hours of labor, and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes, 40,000 hours of labor, and producing a shirt takes 4 hours of labor. What will these nations trade?

a. china will export aircraft, and the united states will export shirts

b. china will export shirts, and the united states will export aircraft

c. both nations will export shirts

d. there are no gains from trade in this situation

there are no gains from trade in this situation

kayla can cook dinner in 30 minute and wash the laundry in 20 minutes. Her roommate takes twice as long to do each task. How should the roommates allocate the work?

a. kayla should do more of the cooking based on her comparative advantage

b. kayla should do more of the washing based on her comparative advantage

c. kayla should do more of the washing based on her absolute advantage

d. there are no gains from trade in this situation