Assume a world with two countries – the U.S. and Japan, where only two products
ID: 1222814 • Letter: A
Question
Assume a world with two countries – the U.S. and Japan, where only two products can be produced – Apples and MP3 players. The table shows labor hours to make each product in each country (1pt for filling in table)
A. The U.S. has an absolute advantage in the production of ___and Japan in the production of _______________
a. Neither good; apples
b. Apples;MP3
c. Both goods; neither goods
d. MP3; apples
B. The U.S. has comparative advantage in the production of __________ and Japan in the production of __________.
a. Neither good; apples
b. Apples;MP3
c. Both goods; neither goods
d. MP3; apples
C. The opportunity cost of producing apples in the U.S. is ____MP3 and in Japan is __________MP3.
a. 1 ; 2
b. 1; 0.5
c. 1;1
d. 2;0.5
D. The opportunity cost of producing MP3 in the U.S. is _____apples and in Japan is ___ apples.
a. 1 ; 2
b. 1; 0.5
c. 1;1
d. 2;0.5
E. Once trade is opened, we can anticipate that the international price of apples will be between __ and ___MP3
a. 1 ; 2
b. 1; 0.5
c. 1;1
d. 2;0.5
F. Once trade is open, we can anticipate that the international price of MP3will be between ___and ____apples.
a. 1 ; 2
b. 1; 0.5
c. 1;1
d. 2;0.5
price of apples price of MP3 labor hours per Apples MP3 U.S Japan 4h 10h 4h 5hExplanation / Answer
A. The U.S. has an absolute advantage in the production of ___and Japan in the production of:
c. Both goods; neither goods
B. The U.S. has comparative advantage in the production of __________ and Japan in the production of __________.
c. Both goods; neither goods
C. The opportunity cost of producing apples in the U.S. is ____MP3 and in Japan is __________MP3.
b. 1; 0.5
D. The opportunity cost of producing MP3 in the U.S. is _____apples and in Japan is ___ apples.
a. 1 ; 2
E. Once trade is opened, we can anticipate that the international price of apples will be between __ and ___MP3
b. 1; 0.5
F. Once trade is open, we can anticipate that the international price of MP3 will be between ___and ____apples.
a. 1 ; 2
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