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Exam 2: Prices,costs and Gains From Trade

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Question 31

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Relative prices cannot fall when absolute prices are rising.

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Question 32

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If no one in a community desires to watch television,then it would be a waste of resources for the community to produce television sets.

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Question 33

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The absolute price of beef in Japan is $10.00 per pound and the absolute price of tuna is $5.00 per pound then the relative price of tuna in terms of beef is

Will people,on average,tend to eat more grapefruit in Florida or in Illinois? In which state will the people,on average,tend to eat better quality grapefruit? Explain,using the concept of relative price.

Mexico and Japan The following questions refer to the following table which shows the abilities of Mexico and Japan to produce food and cloth. Food and cloth are the only two commodities in the world and their production requires only labor. The amounts of labor required to produce one unit of each of these commodities in the two countries are shown in the table below. -Refer to Mexico and Japan.Which of the following statements is true.

A boss can type 200 words per minute and sell 2000 units of the company's product in one day.His assistant can type 150 words per minute and sell 1000 units of the company's product in one day.Discuss who has absolute and comparative advantages in the "production" of typing and selling.

If a job requires two activities and there are two workers who can perform those activities,then which of the following statements regarding absolute advantage must be false?

Suppose there are only two goods: bread and wine.In Mexico,the absolute price of wine is 30 pesos per bottle.If the relative price of wine in terms of bread is 5 loaves per bottle,then the absolute price of bread is

Mexico and Japan The following questions refer to the following table which shows the abilities of Mexico and Japan to produce food and cloth. Food and cloth are the only two commodities in the world and their production requires only labor. The amounts of labor required to produce one unit of each of these commodities in the two countries are shown in the table below. -Refer to Mexico and Japan.Which country is the more efficient food producer,and which country is the more efficient cloth producer?

In a case where there are two possible work activities and two workers,which of the following is true regarding to comparative advantage?

The cost of producing furniture is not the resources used in its production,but the alternative uses for those resources.

Suppose that the due to technological innovations,the absolute price of a recordable CD declines by 25% while the absolute price of a recordable cassette tape declines by 10%.In this situation,the price of the CD relative to the price of a tape

To an economist,a cost is a forgone opportunity.

If foreign professionals perform equal quality work more cheaply than American professionals it is because

If everyone had the same abilities,then no one could benefit from trade.

Assume toys are produced using only labor and wood.Which of the following best describes the cost of producing toys?

The difference between an absolute price and a relative price is that:

Land in California is quite fertile and capable of growing large amounts of tobacco,while the land in New England is relatively rocky,of poorer quality,and capable of growing only smaller tobacco crops.Nevertheless,New England is a larger producer of tobacco than is California.Use the concepts of cost and comparative advantage to resolve this apparent contradiction.

If good wines can be produced in Turkey at costs lower than in the wine exporting countries,but the local population drinks little wine,then Turkey should not produce wine.

The relative price of bread in terms of wine is the amount of wine which can be traded in exchange for a loaf of bread.