Unit #4 Standard #1

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 US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.

Which country has the absolute advantage in producing airplanes?

• Japan

• US

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.

Which country has the comparative advantage in producing trucks and what is their opportunity cost?

• Japan, 1/3 airplane per truck

• US, 1/2 airplane per truck

• US, 2 airplanes per truck

• Japan, 3 airplanes per truck

The ability to produce something using fewer resources than other producers is called having the...(they can produce more...)

• Absolute Advantage

• Comparative Advantage

• Better Advantage

• Competitive Advantage

If Country A can produce coffee beans at a lower opportunity cost than Country B, then Country A has a(n) ____________________ in the production of coffee beans

• Absolute Advantage

• Comparative Advantage

Only producing certain goods instead of everything you need is known as

• importing

• specialization

• balance of trade

• absolute advantage

Which country has the absolute advantage in potatoes?

• China

• India

Which country has the comparative advantage in potatoes?

• India

• China

Which country has the comparative advantage in Iron Ore?

• Australia

• China

Which country has a comparative advantage in cars?

• China

• Aus