7.2 Comparative Advantage in International Trade
1) ________ is the ability to produce more of a good or service than competitors when using the same amount of resources.
A) Absolute advantage
B) Comparative advantage
C) Trade superiority
D) Trade autarky
2) Trade that is within a country or between countries is based on the principle of
A) absolute advantage.
B) scarcity.
C) competition.
D) comparative advantage.
Table 7-1
Berries
Fish
Rob
20
80
Bill
30
60
Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The table lists the pounds of output Rob and Bill produced.
3) Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.
A) Rob has an absolute advantage in picking berries and Bill has an absolute advantage in catching fish.
B) Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish.
C) Bill has an absolute advantage in picking berries and catching fish.
D) Rob has an absolute advantage in picking berries and catching fish.
4) Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.
A) Bill has a greater opportunity cost than Rob for picking berries.
B) Bill’s opportunity cost for catching fish is less than Rob’s.
C) Rob has a greater opportunity cost than Bill for picking berries.
D) Bill’s opportunity cost for picking berries and catching fish are both greater than Rob’s.
5) Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.
A) Bill has a comparative advantage in catching fish.
B) Rob has a comparative advantage in picking berries.
C) Rob has a comparative advantage in catching fish and picking berries.
D) Bill has a comparative advantage in picking berries.
6) Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.
A) Rob has a comparative advantage in catching fish.
B) Bill has an absolute advantage in catching fish.
C) Bill has a comparative advantage in catching fish.
D) Rob has a comparative advantage in picking berries and catching fish.
Table 7-2
Empanadas
Tacos
Madison
30
50
Austin
24
32
Madison and Austin own Cafe Ole’. Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour.
7) Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has an absolute advantage in making tacos and Austin has an absolute advantage in making empanadas.
B) Madison has an absolute advantage in making empanadas and Austin has an absolute advantage in making tacos.
C) Madison has an absolute advantage in making empanadas and tacos.
D) Austin has an absolute advantage in making empanadas and tacos.
8) Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has a greater opportunity cost than Austin for making tacos.
B) Madison’s opportunity cost for making tacos is less than Austin’s.
C) Austin has a greater opportunity cost than Madison for making empanadas.
D) Austin’s opportunity cost for making tacos and making empanadas are both greater than Madison’s.
9) Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has a comparative advantage in making empanadas.
B) Austin has a comparative advantage in making tacos.
C) Madison has a comparative advantage in making empanadas and making tacos.
D) Madison has a comparative advantage in making tacos.
10) Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has a comparative advantage in making empanadas.
B) Austin has an absolute advantage in making tacos.
C) Austin has a comparative advantage in making empanadas.
D) Austin has a comparative advantage in making empanadas and making tacos.
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