Q: If the U.S. uses half its labor to produce computers and half to produce wheat, how many computers and tons of wheat does it produce?

$$250$$ \text{ computers and } 2,500 \text{ tons of wheat}$

Q: If the U.S. exports 700 tons of wheat to Japan and imports 110 computers, how much wheat and how many computers does the U.S. consume?

$$2,700$$ \text{ tons of wheat and } 270 \text{ computers}$

Question 1

Suppose the U.S. has 50,000 labor hours per month. Producing one computer requires 100 hours, and producing one ton of wheat requires 10 hours. What is the maximum number of computers the U.S. can produce if it uses all its labor for computers?

Accepted Answer

Question 2

Given the same scenario, what is the maximum number of tons of wheat the U.S. can produce if it uses all its labor for wheat?

Accepted Answer

$$5,000$$

Question 3

If the U.S. uses half its labor to produce computers and half to produce wheat, how many computers and tons of wheat does it produce?

Accepted Answer

$$250$$ 	ext{ computers and } 2,500 	ext{ tons of wheat}$

Question 4

Japan has 30,000 labor hours per month. Producing one computer requires 125 hours, and producing one ton of wheat requires 25 hours. What is the maximum number of computers Japan can produce?

Accepted Answer

$$240$$

Question 5

What is the opportunity cost of producing one computer in the U.S.?

Accepted Answer

$$10$$ 	ext{ tons of wheat}$

Question 6

What is the opportunity cost of producing one computer in Japan?

Accepted Answer

$$5$$ 	ext{ tons of wheat}$

Question 7

Which country has a comparative advantage in producing computers?

Accepted Answer

Japan

Question 8

If the U.S. produces 3,400 tons of wheat, how many computers can it produce with its remaining labor?

Accepted Answer

$$160$$

Question 9

Suppose Japan uses all its labor to produce 240 computers. How many tons of wheat can it produce with its remaining labor?

Accepted Answer

$$0$$

Question 10

If the U.S. exports 700 tons of wheat to Japan and imports 110 computers, how much wheat and how many computers does the U.S. consume?

Accepted Answer

$$2,700$$ 	ext{ tons of wheat and } 270 	ext{ computers}$

Question 11

Which of the following best describes the concept of absolute advantage?

Accepted Answer

The ability to produce a good using fewer inputs than another producer

Question 12

Which of the following best describes the concept of comparative advantage?

Accepted Answer

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

Question 13

If Argentina’s opportunity cost of producing one bottle of wine is 2 pounds of coffee, and Brazil’s is 5 pounds of coffee, which country has a comparative advantage in wine?

Accepted Answer

Argentina

Question 14

If Brazil can produce one pound of coffee with 1 hour of labor and Argentina requires 2 hours, which country has an absolute advantage in coffee?

Accepted Answer

Brazil

Question 15

Why can both countries gain from trade even if one country has an absolute advantage in both goods?

Accepted Answer

Because gains from trade arise from comparative advantage, not absolute advantage

Question 16

Suppose the U.S. and Japan specialize according to their comparative advantages and trade. What happens to total production and consumption in both countries?

Accepted Answer

Total production and consumption in both countries increase

Question 17

Which of the following is an example of an export?

Accepted Answer

A U.S. company sells wheat to Japan

Question 18

Which of the following is an example of an import?

Accepted Answer

A U.S. company buys computers from Japan

Question 19

If the opportunity cost of producing one ton of wheat in the U.S. is $$0.1$$ computers, and in Japan it is $$0.2$$ computers, which country has a comparative advantage in wheat?

Accepted Answer

The U.S.

Question 20

If the U.S. produces 3,400 tons of wheat and exports 700 tons to Japan, how much wheat does the U.S. have left for domestic consumption?

Accepted Answer

$$2,700$$

Comparative Advantage and the Benefits of Trade

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