Absolute/Comparative Advantage
the ability to produce a good using fewer inputs than another producer
What is absolute advantage?
Specialization should be based on which kind of advantage?
Comparative advantage
How many daughters does Dr.scardino have?
Three
“is what we give up to get that item” (Mankiw, 2019, p. 51)
What is opportunity cost?
Goods produce domestically and sold abroad
What is exports?
The ability to produce a good at a lower
opportunity cost than another producer
What is comparative advantage?
Specialization occurs where opportunity cost is lowest
True
What are Dr.Scardino's Office hours?
Monday and Wednesday, 11:30-1:0
True or False: Absolute advantage is utilized to help explain the opportunity cost of both individuals? (Mankiw, 2019, p. 51).
What is False?
Good produced abroad and sold domestically
What is imports?
TRUE OR FALSE
The person who can produce the good with the smaller quantity of inputs is said to have an absolute advantage in producing the good
True
How does specialization affect the opportunity cost?
a.Minimize the opportunity cost
b.Maximize the opportunity cost
Minimize the opportunity cost
What football team is Dr.Scardino passionate about?
NY Giants
Which of the two advantages, comparative or absolute, corresponds with opportunity cost? (Mankiw, 2019, p. 51)
What is comparative advantage?
"Can make everyone better off"...
What is trade?
The factors that determine what goods a country has a comparative advantage in?
What is abundance, productivity, cost of labor, land, and capital?
True/False
With specialization and trade, production and output for one of the trading partners will exceed the other.
False
With specialization and trade, production and output for each trading partner will exceed that without trade.
What does the principle of comparative advantage explain?
Interdependence and gains from trade
True or False: The opportunity cost of product 1 is the same as product 2. (Mankiw, 2019, p. 51)
What is False?
Shows the various mixes of output that an economy can produce
What is the production possibilities frontier?
If two parties trade based on comparative advantage and both gain, in what range must the price of the trade lie?
- between the two traders’ opportunity costs
Benefits of specialization and trade?
Increase output and higher standard of living
About how long has Dr.Scardio been working at Felician University?
Over 20 years
True or False: If both individuals acquire an identical opportunity cost, then they both acquire comparative advantages on their product (Mankiw, 2019, p. 51)
What is True?
The price of trade must lie between...
their opportunity costs