2.1-Specialisation and trade Flashcards
What is specialization in economics?
Specialization is the process by which individuals or firms focus on a narrow range of tasks to increase efficiency and productivity.
True or False: Specialization can lead to increased overall production.
True
What is the primary benefit of trade between countries?
The primary benefit of trade is that it allows countries to obtain goods and services that they do not produce efficiently themselves.
Fill in the blank: Comparative advantage occurs when a country can produce a good at a __________ opportunity cost than another country.
lower
What does the term ‘opportunity cost’ mean?
Opportunity cost is the value of the next best alternative that is forgone when making a decision.
Multiple Choice: Which of the following is an example of specialization? A) A farmer growing multiple crops B) A factory producing only one type of car C) A teacher teaching various subjects
B) A factory producing only one type of car
What is a production possibility frontier (PPF)?
A PPF is a curve that depicts all maximum output possibilities for two goods, given a set of inputs.
True or False: Countries that specialize can trade to increase their consumption possibilities.
True
What is the impact of specialization on labor?
Specialization can lead to a more skilled workforce as workers become experts in specific tasks.
Fill in the blank: The law of __________ states that as more resources are devoted to producing one good, the opportunity cost of producing that good increases.
increasing opportunity costs
Multiple Choice: Which of the following can result from trade? A) Increased variety of goods B) Decreased efficiency C) Higher prices
A) Increased variety of goods
What is the difference between absolute advantage and comparative advantage?
Absolute advantage refers to the ability of a party to produce more of a good with the same resources than another party, while comparative advantage refers to producing a good at a lower opportunity cost.
True or False: Specialization can lead to economies of scale.
True
What role does technology play in specialization?
Technology can enhance specialization by improving efficiency and productivity in the production process.
Fill in the blank: __________ trade occurs when countries export and import goods based on their respective advantages.
International
Multiple Choice: Which of the following is NOT a benefit of trade? A) Access to larger markets B) Increased competition C) Decreased innovation
C) Decreased innovation
What is the term for the situation where countries depend on each other for goods and services?
Interdependence
True or False: Trade barriers can hinder the benefits of specialization.
True
What is a tariff?
A tariff is a tax imposed on imported goods to protect domestic industries.
Fill in the blank: __________ is the economic concept that explains how countries benefit from trading goods they produce efficiently for goods produced less efficiently by others.
Comparative advantage
Multiple Choice: Which of the following can be a disadvantage of specialization? A) Increased efficiency B) Vulnerability to market changes C) Higher productivity
B) Vulnerability to market changes
What is the effect of specialization on consumer choice?
Specialization can increase consumer choice by providing a greater variety of goods and services.
True or False: Specialization can lead to a reduction in the quality of goods produced.
False
What is the significance of the gains from trade?
The gains from trade refer to the benefits that countries receive from engaging in international trade, which can lead to increased consumption and economic growth.
