Trade

Question 1

Attainable and Efficient

Answer 1

You want both and that is true if you are along the production ppc. If you are above it it’s unattainable, and below is inefficient.

Question 2

What the the equation for the opportunity cost of x?

Answer 2

Loss y / Gain x

Question 3

Where does the price of trade lie?

Answer 3

Between the traders’ opportunity costs, mutually desirable

Question 4

What happens to prices in an exporting nation?

Answer 4

They go up; bad for consumers, good for producers

Question 5

What happens to prices in an importing nation?

Answer 5

Prices go down, good for consumers and bad for producers

Question 6

What is comparative advantage?

Answer 6

The ability of an entity to produce a good at a lower OC than other producers; eg if your country had a disadvantageous OC for a good, you want to import it

Question 7

What is involved under comparative advantage?

Answer 7

Specialization and trade, OC (what you and the other person will incur)…

Question 8

What’s the PPC?

Answer 8

Visualizes the maximum production of one good for a given level of production of another good
Relationship within

Question 9

What are the 5 major factors that go into comparative advantage (at the country level)?

Answer 9

1) natural resources
2) education and productivity of the labor force
3) technology
4) relative abundance of labor and physical capital
5) climate

Question 10

What is an absolute advantage?

Answer 10

Given the same inputs, one producer outperforming the other