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When an economy relies on specialization:

a-) Trade is established according to the value of the specialized product

b-) Centralized coordination is needed to ensure that everyone obtains the goods they need.

c-) There will be more efficiency in production, but there will be disruptions in the distributions of goods.

d-) Trade enables individuals to obtain the goods in which they do not have a specialization

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Sonal Bahl
Sonal BahlLv10
3 Feb 2021

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Related questions

Question 26 pts

Which of the following is not a reason why specialization and trade are beneficial to society?

Specialization fosters learning by doing, thus lowering the unit-costs of products

Firms and workers become less dependent on others for producing goods and services

The total output of economic goods may be increased even without any increase in resources

Scarce resources are utilized more efficiently by exploiting differences among them

Question 27 pts

Laissez-faire capitalism limits the government's economic functions to the following, except:

Protecting private property rights

Establishing a legal environment to enforce contracts among individuals

Setting prices of individual goods and services

Preventing individuals and firms from coercing others

Question 28 pts

A production system where various workers concentrate on different specialized tasks to contribute towards a whole product is referred to as:

Roundabout production

A coincidence of wants

Freedom of enterprise

Division of labor

Question 29 pts

The market system is said to be characterized by "consumer sovereignty." This is because:

A sovereign government determines which consumer goods will be produced

Firms must match their production decisions to the consumers' choices

The prices of consumer goods are regulated by a sovereign government

Consumer goods are considered to be more important than capital goods

Question 30 pts

Consumers express self-interest when they:

Seek the lowest price for a product

Reduce business losses

Exclude others in their thinking

Collect economic profits

Question 311 pts




Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from:

Point 5 to point 1

Point 4 to point 1

Point 2 to point 5

Point 4 to point 6

Question 32 pts

The table below shows the weekly demand for hamburger in a market where there are just three buyers.



Refer to the above table. At a price of $6, the weekly market quantity demanded for hamburger is:

17

23

24

18

Question 33pts

If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n):

Movement up along the current supply curve of corn

Movement down along the current supply curve of corn

Leftward shift in the current supply of corn

Rightward shift in the current supply of corn

Question 34 pts

Which of the following will not cause the supply curve to shift?

A technological change in the production of the good

A change in the prices of other goods that producers could be producing

A change in the costs of resources needed to produce the good

A change in the price of the good

Question 35 pts

All of the following would affect the position of the supply curve for cranberries, except the:

Price of agricultural land for cranberries

Cost of fertilizers for cranberry production

Popularity of cranberry drinks

Development of a new pest control for cranberries

Question 36 pts

When high-school and college graduates apply for jobs in the labor markets,

Job applicants and employers are both "buyers".

Job applicants are the "sellers" while employers are the "buyers".

Job applicants and employers are both "sellers".

Job applicants are the "buyers" while employers are the "sellers".

Question 37 pts




Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?

A decrease in consumer incomes, assuming corn is a normal good

The development of a more effective insecticide against corn rootworm

An increase in the price of fertilizer

A change in consumer tastes away from cornbread

Question 38 pts

Which is of the following statements is correct?

If demand increases, then price will decrease

If demand decreases, then price will decrease

If price decreases, then demand will decrease

If price increases, then demand will decrease

Question 39 pts

Which would be a likely cause of an increase in the demand for pizza?

A decrease in the price of hamburger sandwiches

A health report showing eating pizza reduces stress

A reduced desire for take-out and fast-food dining

A decrease in the prices of cheese, pepperoni, and mushrooms

Question 40 pts

A market for a product reaches equilibrium when:

Price falls further after there is a shortage

The price rises further after there is a surplus

Buyers intend to buy a quantity equal to the quantity that sellers intend to sell

The actual quantity bought by buyers equals actual quantity sold by sellers

Question 41 pts

A higher price reduces the quantity demanded for a product because:

Individuals can afford less of the product and will switch to substitutes

The financial assets of individuals increase

Individuals will buy more of the product and less of its substitutes

The purchasing power of individuals increases

Question 42 pts

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?

Price of electric cars

How much sellers are charging customers for electric cars

Price of gasoline cars

Quantity of electric cars demanded by buyers

Question 43 pts

Use the following graph of the demand for coffee:



Refer to the above diagram of three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a:

Movement from point a to point b

Movement from point b to point a

Shift from D1 to D2

Shift from D1 to D3

Question 44 pts

Which of the following factors will decrease the current demand for a product?

A decrease in the current price of a complementary product

A decrease in the current price of a substitute product

An increase in the current price of a substitute product

An expected increase in the future price of the product

Question 45pts

In competitive markets, a surplus or shortage will:

Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage

Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage

Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage

Never exist because the markets are always at equilibrium

Question 46 pts

Which of the following would cause a leftward shift in the supply curve for car washes?

A decrease in taxes on car washes

An increase in the price of car washing equipment

A decrease in the price of water

An increase in the number of cars in the city

Question 47pts

The market system automatically corrects a surplus condition in a competitive market by:

Raising the price of the commodity in question while decreasing the quantity demanded

Raising the price of the commodity in question while increasing the quantity demanded

Reducing the price of the commodity in question while increasing the quantity demanded

Reducing the price of the commodity in question while decreasing the quantity demanded

Question 48 pts

A leftward shift of the supply curve for oil in the United States is most likely to result from:

A decrease in the world price of oil

An increase in the costs of exploration and drilling for oil

An increase in the subsidy for oil exploration and drilling

A decrease in the fees that oil companies must pay for drilling licenses

Question 49 pts

A fall in the price of milk, used in the production of ice cream, will:

Decrease the supply of ice cream

Have no effect on the supply of ice cream

Increase the supply of ice cream

Cause a movement along the supply curve of ice cream

Question 50 pts




Refer to the above graph, which shows the market for beef where demand shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from:

An increase in the cost of cattle feed

A decrease in consumer incomes

A decrease in the tax on beef products

An increase in the price of pork

PART B – Questions 10 – 27 Use the following assumptions to answer all questions: • There are three countries – Argentina, Britain and Canada. • Each country produces and consumes two kinds of goods – crude oil and beef. • All countries make their goods from a single type of input – labor – and each country has 700 hours of labor available to produce crude oil and beef. • Each country demands 5 (five) barrels of crude oil. This assumption simply means that a country must have exactly 5 barrels of crude oil – it may produce them domestically, it may import them from abroad, or it makes some domestically and imports the rest. • Countries produce goods using the technology described in the table below Technology Hours of labor needed to produce one unit of good Using the above assumptions, answer the following questions: • Calculate the quantities of crude oil and beef produced in each country in autarky (when they do not trade and each country produces its own crude oil and beef) • Order the countries according to their absolute advantage in production of crude oil • Order the countries according to their absolute advantage in production of beef • Consider the case where countries are free to specialize and trade. In the table below calculate each country’s opportunity cost of producing one unit of each good. • Calculate the quantities of crude oil and beef produced in each country, consistent with the country’s comparative advantage. Based on the above calculations, answer questions 10 through 27: Consider autarky, when countries do not trade and each country produces its own crude oil and beef. 10. In autarky, Argentina produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 11. In autarky, Britain produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 12. In autarky, Canada produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 13. In autarky, Argentina produces _____ pounds of beef. a. 0 b. 70 c. 150 d. 400 14. In autarky, Britain produces _____ pounds of beef. a. 0 b. 70 c. 150 d. 400 15. In autarky, Canada produces _____ pounds of beef. a. 0 b. 70 c. 150 d. 400 16. Country of _____ has absolute advantage in production of crude oil. a. Argentina b. Britain c. Canada d. No country 17. Country of _____ has absolute advantage in production of beef. a. Argentina b. Britain c. Canada d. No country Consider effects of specialization, when countries are allowed to trade. 18. When countries specialize, Argentina produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 19. When countries specialize, Britain produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 20. When countries specialize, Canada produces _____ barrels of oil. a. 0 b. 5 c. 10 d. 15 21. When countries specialize, Argentina produces _____ pounds of beef. a. 0 b. 700 c. 150 d. 400 22. When countries specialize, Britain produces _____ pounds of beef. a. 0 b. 700 c. 150 d. 400 23. When countries specialize, Canada produces ____ pounds of beef. a. 0 b. 700 c. 150 d. 400 24. Country of __C___ has comparative advantage in production of crude oil. a. Argentina b. Britain c. Canada d. No country 25. Country of ___A__ has comparative advantage in production of beef. a. Argentina b. Britain c. Canada d. No country 26. Countries gain from trade because specialization increases ____. a. Trade deficit b. Unemployment c. Efficiency d. Inflation 27. Countries should trade with trading partners that _____. a. Are equally technologically advanced b. Use superior technology in every industry c. Use less advanced technology in every industry d. Use different technologies, because trade benefits all

3. Gains from trade

Consider two neighboring island countries called Felicidad and Arcadia. They each have 4 million labor hours available per month that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor.

Country Jeans Rye
(Pairs per hour of labor) (Bushels per hour of labor)
Felicidad 8 32
Arcadia 12 24

Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Felicidad produces 24 million pairs of jeans and 32 million bushels of rye, and Arcadia produces 12 million pairs of jeans and 72 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.

Felicidad's opportunity cost of producing 1 pair of jeans is _____ of rye, and Arcadia's opportunity cost of producing 1 pair of jeans is _____ of rye. Therefore, _____ has a comparative advantage in the production of jeans, and ____ has a comparative advantage in the production of rye.

Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces jeans will produce ______ millions pairs per month, and the country that produces rye will produce ______ millions bushels per month.

In the following table, enter each country's production decision on the third row of the table (marked "Production").

Suppose the country that produces jeans trades 26 million pairs of jeans to the other country in exchange for 78 million bushels of rye.

In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and enter each country's final consumption of each good on the line marked "Consumption."

When the two countries did not specialize, the total production of jeans was 36 million pairs per month, and the total production of rye was 104 million bushels per month. Because of specialization, the total production of jeans has increased by ____ million pairs per month, and the total production of rye has increased by _____ million bushels per month.

Because the two countries produce more jeans and more rye under specialization, each country is able to gain from trade.

Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption").

Felicidad

Arcadia
Jeans Rye Jeans Rye
(Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels)
Without Trade
Production 24 32 12 72
Consumption 24 32 12 72
With Trade ? ? ? ?
Production ? ? ? ?
Trade action ? ? ? ?
Consumption ? ? ? ?
Gains from Trade ? ? ? ?
Increase in Consumption ? ? ? ?

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