d. may fall, rise, or stay the same. Terms (Hint: Calculate the opportunity cost of producing X and Y for each individual.) (Hint: Calculate the opportunity cost of producing X and Y for each production of good Y, and individual.) Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. 3. B) Jimbo has a lower opportunity cost of producing the good than does Ned. ANSWER: F TYPE: T SECTION: 2 11. rises: When each person specializes in producing the good for which he or she has a comparative advantage, total production in the economy. c. rises d. may fall, rise, or stay the same. as a result, Arturo gains: When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. falls. 1. c. rises and both consumers and producers gain. (b) the higher the opportunity cost to him of producing other goods. Wheat - 4 bushels/hour. b. stays the same. c. rises. As a result, Arturo gained a. Services, Comparative Advantage: Definition and Examples, Working Scholars® Bringing Tuition-Free College to the Community. b. stays the same. Suppose that Spain and Germany both produce oil... Unit labor requirements per one unit of a good. c. Total output in an economy increases when each person specializes because b. rises and producers gain and consumers lose. b. stays the same. When each person specializes in producing a good at which she has comparative advantage and exchanges for other goods, they are gains from trade. b. stays the same. Privacy When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. falls. This preview shows page 3 - 5 out of 26 pages. Comparative advantage is important for trade. Figure 1 ractorS rubas (Hint: Calculate the opportunity cost of producing X and Y for each production of good Y, and individual.) When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy: a. falls. - Definition, Pros, Cons & Examples, Terms of Trade in Economics: Definition, Formula & Examples, New Trade Theory (NTT): Definition & Analysis, Specialization in Economics: Definition & Concept, Newly Industrialized Countries: Characteristics & Sectors of Production, Currency Appreciation & Depreciation: Effects of Exchange Rate Changes, Advantages and Disadvantages of Trade Protectionism, Economic Incentives: Definition & Examples, Law of Increasing Opportunity Cost: Definition & Concept, Total Cost in Economics: Definition & Formula, Trade-Offs in Economics: Definition & Examples, Circular Flow Diagram in Economics: Definition & Example, How to Calculate Economic Profit: Definition & Formula, Average Variable Cost (AVC): Definition, Function & Equation, The Market Demand Curve: Definition, Equation & Examples, Perfect Competition: Definition, Characteristics & Examples, College Macroeconomics: Tutoring Solution, ORELA Middle Grades Social Science: Practice & Study Guide, UExcel Introduction to Macroeconomics: Study Guide & Test Prep, Principles of Macroeconomics: Certificate Program, College Macroeconomics: Homework Help Resource, Introduction to Macroeconomics: Help and Review, Macroeconomics Syllabus Resource & Lesson Plans, Praxis Business Education - Content Knowledge (5101): Practice & Study Guide, Praxis English Language Arts - Content & Analysis (5039): Practice & Study Guide, SAT Subject Test Chemistry: Practice and Study Guide, ILTS Social Science - Economics (244): Test Practice and Study Guide, Political Science 102: American Government, Biological and Biomedical In order to achieve gains from trade, a country should produce and trade a good if it a) can produce more of the good than its trading partner b) can produce at a lower opportunity cost than its trading partner c) has lower wages than its trading partner d) has economies of scale If each person specializes in the production of the good for which they have the comparative advantage, then (David or Tina) would specialize in the production of good Y, and (David or Tina) would specialize in the production of good X. (300 huts, 60,000 bowls) and (200 huts, 80,000 bowls) The same analysis would apply to the exchange price of coconuts. b. payments to land, labor, and capital. © copyright 2003-2020 Study.com. It is the result exclusively of Ann specializing more in fishing and Bob specializing more in gathering bananas. When someone specializes and trades his … View desktop site, Principles of Economics Multiple choice short answer plz, 3. star outlined. Specialization and trade increase production and make people better off. ... Absolute Advantage - a person can produce a good or service with fewer resources than can another person. b. stays the same. c. rises Figure 1 ractorS rubas. Unless two people who are producing two goods have exactly the same opportunity costs, each will have a comparative advantage in a different good. Will a nation tend to export or import goods for which it has a comparative advantage. Specialization and exchange allow consumption (not production) at points outside PPF. ANSWER: T TYPE: T SECTION: 2 10. Person has absolute advantagein producing a good if, using … What is the absolute advantage and comparative... Inlandia and Outlandia can both produce cars of... U.S. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not. | Suppose Gilligan and Marianne are shipwrecked on... Walter has reached a crossroads in his life. & In economics, a comparative advantage occurs when a country can produce a good or service at a lower opportunity cost than another country. See the answer. Which good should each person specialize in to boost overall production in the economy? As a result, the farmer gained a. Let's assume that person A is far superior in every line of production and B is less superior. All other trademarks and copyrights are the property of their respective owners. © 2003-2020 Chegg Inc. All rights reserved. When each person specializes in producing a good at. A person who can produce a good at a lower cost than another person has a comparative advantage in the production of that good, and is the person who should produce it. Create your account. heart outlined. Absolute advantage is found by comparing different producers’ a. opportunity costs. 2. 1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes. When each person specializes in producing the good for which he or she has a comparative advantage, total production in the economy rises, and this increase in the size of the economic pie can be used to make everyone better off. When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy a. falls. Become a Study.com member to unlock this Tina David х Y X Y 250 0 200 0 125 62.5 100 10 0 125 0 20 would specialize in the If each person specializes in the production of the good for which they have the comparative advantage, then production of good Y, and would specialize in the production of good X.

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