Q: Suppose the U.S. produces 3,400 tons of wheat. How many computers can it produce with its remaining labor hours?

$$\frac{50,000 - (3,400 \times 10)}{100} = 160$$ 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 specializes only in computers?

Accepted Answer

$$\frac{50,000}{100} = 500$$ computers

Question 2

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 opportunity cost of producing one computer in Japan?

Accepted Answer

$$\frac{125}{25} = 5$$ tons of wheat

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 will it produce and consume?

Accepted Answer

250 computers and 2,500 tons of wheat

Question 4

Which country has a comparative advantage in producing computers, and why?

Accepted Answer

Japan, because its opportunity cost of producing a computer is lower than the U.S.

Question 5

If Argentina requires 2 hours to produce a pound of coffee and 4 hours for a bottle of wine, and Brazil requires 1 hour for coffee and 5 hours for wine, which country has a comparative advantage in wine?

Accepted Answer

Argentina, because its opportunity cost of wine is lower than Brazil's

Question 6

What is the definition of absolute advantage?

Accepted Answer

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

Question 7

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

Accepted Answer

$$\frac{50,000 - (3,400 	imes 10)}{100} = 160$$ computers

Question 8

If Japan produces 240 computers, how many tons of wheat can it produce with its remaining labor hours?

Accepted Answer

0 tons of wheat

Question 9

Which of the following statements best explains why both countries can gain from trade even if one country has an absolute advantage in both goods?

Accepted Answer

Gains from trade arise from comparative advantage, not absolute advantage

Question 10

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

Accepted Answer

$$3,400 - 700 = 2,700$$ tons of wheat

Question 11

What is the opportunity cost of producing one bottle of wine in Argentina?

Accepted Answer

$$\frac{4}{2} = 2$$ pounds of coffee

Question 12

Which of the following is the definition of comparative advantage?

Accepted Answer

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

Question 13

If Brazil's opportunity cost of producing one bottle of wine is 5 pounds of coffee, and Argentina's is 2 pounds of coffee, which country should specialize in wine production?

Accepted Answer

Argentina

Question 14

Which formula correctly calculates the opportunity cost of producing one computer in the U.S.?

Accepted Answer

$$\frac{	ext{Labor hours for one computer}}{	ext{Labor hours for one ton of wheat}}$$

Question 15

If the U.S. has an absolute advantage in both computers and wheat, why does Japan specialize in computers?

Accepted Answer

Japan has a lower opportunity cost for computers, giving it a comparative advantage

Question 16

Which of the following best describes the gains from trade?

Accepted Answer

Both countries can consume more than they could without trade by specializing according to comparative advantage

Question 17

If Japan imports 700 tons of wheat and exports 110 computers, how many computers does Japan consume?

Accepted Answer

$$240 - 110 = 130$$ computers

Question 18

Which of the following is NOT a reason why trade can make everyone better off?

Accepted Answer

Trade requires countries to have equal resources and technology

Question 19

If the opportunity cost of producing a computer in the U.S. is 10 tons of wheat, and in Japan it is 5 tons of wheat, which country should specialize in wheat?

Accepted Answer

U.S.

Question 20

Which of the following best describes exports?

Accepted Answer

Goods produced domestically and sold abroad

The Benefits of Trade: Absolute and Comparative Advantage in Macroeconomics

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