/FontFile2 12 0 R /FontName /BCDFEE+PalatinoLinotype-BoldItalic /FontWeight 700 /ItalicAngle -10 /MaxWidth 1461 /StemV 44 It used to be that Hawaii was the chief place to grow pineapples, and large areas of land were covered by pineapple farms, on five of the eight main islands, including Maui, Lanai, Molokai, Oahu, and Kauai. While Hawai‘i had comparative advantage in fresh papayas, pineapples (processed), cut flowers/buds, macadamia nuts (processed), ornamental fish, and tuna in 1995, it has considerably lost its comparative advantage in these products over the years. If someone has a comparative advantage in growing pineapples, A) they can grow pineapples at a lower opportunity cost than other pineapple growers. Belgium has a comparative advantage in brooms. E������WA�}u���'��paU�Q e9+�c��A��n�ږ�xw�z��휉�9̧��Xۍ�ű}����I]O�o'bzT}�����qqff�����;={O!���5n}|ԝ�f�?�^������l��Tj����ZE]]��/Ԁ�R�:Y���� >> In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it! 0 0 0 0 0 0 0 760 ] Some students really struggle with the idea of calculating opportunity cost and finding the comparative advantage. 8 0 obj In fact, we grow vegetables in our own backyards. ������Uׁy;����v@"���CC߉NAg��Sӱ��%ӱ� {�thkA���w���}�����աkE7�t?! International trade - International trade - Sources of comparative advantage: As already noted, British classical economists simply accepted the fact that productivity differences exist between countries; they made no concerted attempt to explain which commodities a country would export or import. 500 0 333 389 278 500 0 0 0 500 This study examined the sensory quality of the pineapples. 5 0 obj Macroland is currently operating at Point A. /Type /FontDescriptor /XHeight 250 ]>�cՉ��dh��+�X��e1"�Jz�+������s�B(E�8}��۾{�W7&¾��;t��>��M~K��*R?rY�G ��+���b� 0�E75p�I��ĕ7���(����.�����V�Kj�If\��/(������@�ӋGj�1�>2�o��,p��g���;f endobj B.Will has an absolute advantage in growing both tomatoes and lettuce.Will has an absolute advantage in growing both tomatoes and lettuce. 0 0 0 0 0 0 0 0 0 0 The firmness of pineapple fruits measured in outside and inside to be 0.21 to 0.27 N/m 2 and 0.06 to 0.10 N/m 2 respectively. 4 0 obj Answer: B 19) If someone has a comparative advantage in growing pineapples, 19) A) they can grow pineapples at a lower opportunity cost than other pineapple growers. /BM /Normal /CA 1 /Type /ExtGState B) they also have an absolute advantage in growing pineapples. B) they also have an absolute advantage in growing pineapples. The process of using resources to produce new capital is _____. 19) If someone has a comparative adva ntage in growing pineapples, A) they can grow pineapples at a lower opportunity cost than other pineapple growers. The government must ________ the price of electricity by ________. Then Brazil has a a. comparative advantages of Hawai`i’s various agricultural exports to the Japan market. 0 0 0 0 0 667 0 611 0 0 B) they also have an absolute advantage in growing pineapples. >> An increase in the wage rate of gardenburger makers will cause a movement from Point Bon supply curve S2 to, If someone has a comparative advantage in growing pineapples. d. Belgium has an absolute advantage in brooms. The theory of comparative advantage shows that even if a country enjoys an absolute advantage in the production of goods Normal Goods Normal goods are a type of goods whose demand shows a direct relationship with a consumer’s income. But if people understood comparative advantage, much of the impetus for buying local foods would disappear. Pineapples are susceptible to rot, so leave stalks few days to dry. The price elasticity of demand forfresh fish is ________ and total revenue from fresh fish sales will ________. It is important so that the chopped ends dry up. �/�+Q�*��� +�*�/��/����� The demand for Pokemon cards describes how the quantity demand changes when the price of Pokemon cardschanges. A) Tahiti B) Bora Bora C) They have equal productive abilities. Thereby, a little stalk appears from below. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 556 0 /Type /XObject c)Dianna has comparative advantage in producing bananas, and Jim has comparative advantage in producing pineapples. L��n�{���N��u�����2?~%���O��,�+0Ry��`�aV8�e�����_��r��+�FX��sT�{�[�6�endstream An example of forgoing present benefits in order to receive future benefits is _____. ԗB���R�EX_E�X��.CK;\��:� 0 500 500 278 0 0 0 0 500 500 A person has a comparative advantageat producing something if he can produce it at lower cost than anyone else. an approach to economics that seeks to understand behavior and the operation of systems without making judgements. << Using all its resources, country A can produce 30m cars or 6m trucks, and country B can produce 35m cars or 21m trucks. 0 0 0 0 0 0 0 0 0 0 /ExtGState << << /F1 13 0 R /F2 6 0 R /F3 9 0 R /F4 17 0 R /F5 21 0 R Hawai‘i has stronger comparative advantage in products with higher RCA scores. [ 250 0 0 0 0 0 0 0 0 0 Absolute and Comparative Advantage Absolute Advantage • The producer that can produce the most output OR requires the least amount of inputs (resources). B) Texas has a comparative advantage on making beef because, they have open ranges and a lot of grass and everything is bigger in Texas. << /BBox [ 0.0 0.0 612.0 792.0 ] /Filter /FlateDecode /FormType 1 /Length 1785 /Resources << /Subtype /TrueType /Type /Font /Widths 7 0 R However, if pressed to name the main advantage of eating fresh pineapple or drinking its juice, many would likely mention its deliciously unique taste: sweet, yet tart at the same time. Someone has a comparative advantage in producing a good if they can produce that good a) in greater quantities b) at a lower opportunity cost c) using more capital and less labor d) without sunk costs. >> /Subtype /Form Then Hawai‘i’s comparative advantage in each advantage in products whose RCA scores are greater product can be assessed by comparing these products’ than 1. Will has a comparative advantage in growing tomatoes if. endobj endobj ]�I�+��N'd9,A���H� n3f0��~����5�s���_���y�(a>;ɿ�0;��T�a@d@d@d@N/�G{�}2�#p>׌�rtE�;\\�m��d��w�ta���a��׬us1���X����A%�O�.�%���h�v�Y��IN���f!��T���H �nLt�L�a����*�Ę��a�C�H\)� XP22��k�_H�1C��G�,��0Y�3!&��x���=�I!n�!�/FoӼ�|��#�?�U�p�S"θ��f�sȿ���!D1A�O�c�&�q@9�Z�u �Z8�>k�fx �)j ��u���r�����&�C0��D��*X�`�> ���@t�S;Np!����4�4�h���������� ����~D���D̆A�A��ރA���y�����y01 In this case, the cost of producing one product is the amount of some other product that now can not be made. C) they can grow pineapples at a lower opportunity cost than other pineapple growers. >> Production of pineapples on the Hawaiian Islands has declined in the last few decades. Comparative Advantage • The producer with the lowest opportunity cost. /Ascent 732 /AvgWidth 447 /CapHeight 732 /Descent -284 /Flags 32 /FontBBox [ -156 -284 1305 732 ] Fortunately pineapples are quite adaptable and if you can grow a mango in your area, then you can grow a pineapple. >> B) she also has an absolute advantage in growing pineapples. /BaseFont /TimesNewRomanPSMT /Encoding /WinAnsiEncoding /FirstChar 32 /FontDescriptor 8 0 R /LastChar 169 /Name /F2 endobj What we're going to see is if both of these parties specialize in their comparative advantage and then trade, they can get outcomes that are beyond each of their individual production possibility frontiers. • Ex: Papa John has an absolute advantage in pizzas because he can produce 100 and Ronald can only make 20. >> If someone has a comparative advantage in growing pineapples, A) they also have an absolute advantage in growing pineapples. Comparative advantage exists when a country has a margin of superiority in the production of a good or service i.e. /BaseFont /Helvetica /Encoding /WinAnsiEncoding /Name /F1 /Subtype /Type1 /Type /Font 0 0 0 0 0 556 537 444 556 444 0 0 0 0 0 444 0 444 500 444 Pineapple is delicious tropical fruit and known as the storehouse of fruits as it also contains many healthy nutrients, Vitamins, Minerals including potassium, calcium, magnesium, carbohydrates, Vitamin C, as well as soluble and insoluble fiber. This isbest described as, An insect that is resistant to currently used pesticides has infested the cotton crop, and this year's crop is onlyhalf of what was produced last year. Try reminding them that, in economics, cost is not always money. The key to teaching these concepts is practice. stream 11 0 obj That’s comparative advantage – the rabbi is vertically-challenged so he has a comparative advantage picking things low whereas the priest is high so he may pick unforbidden fruit. A.Will can produce enough vegetables for himself and for Di.Will can produce enough vegetables for himself and for Di. 5 1/4 unit of good B for Nation X and 2 units of good B for Nation Y. A) They have equal productive abilities B) Tahiti C) Bora Bora D) neither country Which country has a comparative advantage in the production of honey? Answer: C Diff: 1 Topic: Scarcity, Choice, … Hawai‘i has above-average comparative ness. �tֱ����t�В�J �M ����^b/ˉ�������B���B�dA��P����2�̛�_N��5���7x�r��Д�fYcT�Vt���4�x��7���kwl�$���g�?R:���c�Rs���TL�)*"���L#�{�#v��'�F=�� F��3�kv{�k�ᜑ�q���^�H�V�R�"*vZg�9L�x���:k��ŒR2��n#���?�8�#��l*eײ�'�>��C���?��wʤ�P��a^5r�6c>�F��p��{����E���ϯ�I�DI�6�F`�i�$Lw��F�b�-�+є�;Y)�)���;Þ�j�N!� 12 0 obj endobj Pineapple is relatively high in fructose -- or fruit sugar -- compared to other fruits, but it also contains sour compounds such as malic acid and citric acid. refer to question 7. B) they can grow more pineapples using the same resources than other pineapple growers. The creation of capital. B) it will find trade most beneficial when it trades with another country that has a comparative advantage in the same good. Comparative advantage. [ 250 0 0 0 0 0 0 0 0 0 /F1 2 0 R /F2 25 0 R /FontName /TimesNewRomanPSMT /FontWeight 400 /ItalicAngle 0 /Leading 42 /MaxWidth 2614 /StemV 40 Separate some of the leaves below. 722 0 611 0 0 0 0 0 0 0 C) they can grow more pineapples using the same resources than other pineapple growers. When the price of fresh fish increases 10%, quantity demanded decreases 5%. >> /Font << stream 2 the Macro Islands have an comparative advantage in producing sun glasses. As the advantage a Costa Rican farmer has in growing pineapples over one in Greenland does. C) it will not find trade beneficial because other country(ies) won't have a comparative advantage in other goods. << wjO�m��v��6�_�7��B�؉�]�?�;`�vw����h�����]�q'܋���W�~�x7���p�v �=�1x q7�՞�{�Lj����?��kO�����a����8. ���G���gb\���q@�L@�Ҿ��A��-��n7%Ɖ�;��ĵn#�\��L��(m]��Y� look at question 8's graph: as the economy moves from Point E to Point A, the opportunity cost of hybrid cars,measured in terms of motorcycles, Refer to question 9. Which of the following would an economist classify as capital? Having a comparative advantage is not the same as being the best at something. Direct sunlight and well-drained soil are good for it. an approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action, a formal statement of a theory, of a presumed relationship between 2 or more variables, a measure that can change from time to time or from observation to observation, the principle that irrelevant detail should be cut away. 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Suppose that Australia and Brazil have the outputs per worker in producing sleds and clarinets shown in the table at the right. << f2T��Ք��īVW��M�L�"��È�D`5��gKۂ��D�J �*�\��-�e$t�d������C�+��� Most people eat food for the taste and texture and don’t think too much in terms of advantages or disadvantages. >> where the opportunity cost of production is lower.- x��] `T��>��7o��͞�$��Y� Y&�2$$�6��`� &�HbqAA�Ѐ�R[��_���Xm+RjikUZ����E��R�U[Q��s��$��DǶ9p�{���w����ޛ p!p�8vƄq��Įr�.�������B����0Uָ��3�ޕ�_ �>nƬ�46� ���2~���'�0�N�QX|���a �u��x��)��^��]��hqӲ��o�X��tѥ���OL< 10 0 obj << /GS7 5 0 R /GS8 4 0 R endobj If a country has a comparative advantage in the production of a good: A) it can produce that good at a lower opportunity cost. When the tomatoes are ripe and the price is right, we, the two authors, enjoy local food. endobj /Subtype /TrueType /Type /Font /Widths 10 0 R endobj Refer to question 3 on practice test. Which of the following would be most likely to cause the demand for Dr. Pepper to shiftfrom D0 to D1? 2 0 obj The price elasticity of demand for electricity is-5. 0 0 0 0 0 944 0 0 667 0 endobj D)she can grow pineapples at a lower opportunity cost than other pineapple growers. 0 0 250 0 250 0 500 500 500 0 C) she can grow more pineapples using the same resources than other pineapple growers. Hawai‘i would have products with higher RCA scores. You accurately predict that this, According to the theory of comparative advantage, specialization and free trade will benefit. /Ascent 891 /AvgWidth 401 /CapHeight 693 /Descent -216 /Flags 32 /FontBBox [ -568 -216 2046 693 ] 556 537 389 444 389 556 556 833 ] C)pineapples are the only product she can grow. Refer to question 2 on practice test. To see the difference, consider an attorney and their secretary. C) japan has a comparative advantage in technology because they are more advanced and have more scientists. This can be summarised in a table. >> /Type /FontDescriptor /XHeight 250 C� �h�@�"�a�C�qi�B�XňáD{���ˆ�P�� �`b"��p����@F!��шP��QE c+�J�+D�q�E���j�Վ�X�X�ka��&��I��a2���8����`*�d�C�Ӵ?ù0q*�@�����`��L��g�WgB=�,h�^��`6�W�|�z�@�4���0�|hD� ���`�C�!^�ګ�'hAl�����bċ�U{�� �hG`>,�^��aꭰ�6X��`)�a�"X���p�v�� [�Ag��L�D�+f�+5uhR�Ս��>���g}5N��B��ݓ۴���be�83�&@��6�L�J=��~y�A�����G��Ŧ�g� kdb\�1����*�r�y�Hk �w�eݠ��2���*�YX�wo��^JxȈc��~>Q�w�$�_a����e�7�A Which country has a comparative advantage in the production of milk? If someone has a comparative advantage in growing pineapples A)she also has an absolute advantage in growing pineapples. 500 0 0 0 0 0 0 0 0 0 1 0 obj %���� ReportLab Generated PDF document http://www.reportlab.com Which of the following, if true, would most effectively undermine the argument that raising cigarette taxesreduces the number of people who smoke cigarettes? Which of the following are parts of a typical economic model? c. Austria has an absolute advantage in steel. Investment . >> The amount of education that one has is an important factor in the determination of his or her wage rate. << Competitiveness and comparative advantage are unlikely to be constant over time because of changes in (1)Comparative advantage measured by the RCA index is called “revealed” comparative advantage because market shares reflect competitiveness but do not explain the sources of competitiveness. << 4 4 units of good A for Nation X and 1/2 unit of good A for Nation Y. p�X f��e/^��Z;�ui�yƋ�V,���uX���E�Ϳ��(?��[�ڼxe'l���0��XkKS�_6�aً0}� և�G1|��.n_9������ �–K�~ý�́�-���9볁̍��7�\&�a��0޿�iq�8f�m�~5�Wl�������X�"�쒖e�'.� \?���� ���ә-�^��]��F�x��ѽ�]�rq>� q�|�>����b�y9X�������M؏��s�P� �1��"��71b�h0p��"��b�`%c#� �d�;̺(�=Y�� �N� ���u�3-x)�럛k�K�XC7|�p+�c���מN�������+�����O/y@���[Ӹɰ��ꨎ~%�SS9о�� �F&Ӣ���ah�k�1�*�a3��ߌ�2tLW�������a��-��:��������T�t͚�L+Th���n�W{�I�c̐�.��u�۪�W�?J�c>�^� PΧC�a+��x0�ynfF�"�W�&�+�^f��b�,#CS2-�[�rhB{�[�� b. 333 500 556 333 0 0 333 833 556 556 e. All of the above. 6 Hawai‘i has stronger comparative advantage in competitiveness to one another. endobj 0 0 250 0 250 0 0 500 500 500 �8��"$���vLK{����o��h��J*��ȩ���_v_�6�-_j�фZ��"?������8�n����H@(����R�[��ô��XI{š?0������m��zޏ�Szʇ��ʪ#�5���7�}B�^i�*%��pR)h�����y�S�>�ߋ��Z�B�/�@K�څ�1�����h��v�䏣5}��(/��";�d�Ȅ3C��� ~�:uV�YQ8\a^D}hú �%��$/.�B����?�(���M����� >> /ProcSet [ /PDF /Text /ImageB /ImageC /ImageI ] 7 0 obj /Filter /FlateDecode /Length 51609 /Length1 112268 9 0 obj Comparative advantage is a key principle in international trade and forms the basis of why free trade is beneficial to countries. x��Zێ�6}7��XČH�/E֛-�n�5����,���V�N����egF��Hb�ݎ�� ��%Q�9g8�9�~|��T��qjD�����z2�d>h�-�o�IE(���{}���S��^R��{Z�"&�/�? To grow pineapple, take at least 8-inch containers, for this, the terracotta container is considered the most suitable. 0 0 0 0 0 0 0 0 0 0 The pH values of the four varieties were found to be in the range of 4.30 to 4.36. DVDs and DVD players are complements. In economics, investment always refers to _____. << Someone who is the best at doing something is said to have an absolute advantage.Lance Armstrong has an absolute advantage at cyclin… So this is where Charlie has the comparative advantage. 3 0 obj Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products. 0 0 0 0 0 0 0 0 0 0 /BaseFont /BCDFEE+PalatinoLinotype-BoldItalic /Encoding /WinAnsiEncoding /FirstChar 32 /FontDescriptor 11 0 R /LastChar 119 /Name /F3 << Ans: e 6. Some varieties of pineapple, particularly Kona Sugarloaf from Hawaii… comparative advantage methodology is used to determine whether New Zealand has a comparative advantage in Kiwifruit. As that cluster of factories outside Bangkok which produce so … >> b. Austria has a comparative advantage in steel. %PDF-1.3 D) pineapples are the only product they can grow. A government wants to reduce electricity consumption by 10%. Because resources are scarce, the opportunity cost of investment in capital is, The reason that opportunity costs arise is that, Because resources are not equally well suited to producing all goods, Refer to question 16. First, let’s get some more vocabulary. 0 333 0 0 0 0 0 0 556 0 >> The best explanation for this is that. C) they can grow more pineapples using the same resources than other pineapple growers. The notion follows that countries have similar advantages: Kiwi grows easily in New Zealand, and not so easily in Saudi Arabia. 500 500 500 0 0 0 0 0 0 0 6 0 obj B)she can grow more pineapples using the same resources than other pineapple growers. Which of the following is most likely to shift the production possibility frontier from ppf2 toppf1? An increase in the price of DVD players would cause which of thefollowing in the market for DVDs? In some places on the islands pineapple production has completely disappeared. Which is assumed to be constant as the price of Pokemon cards changes? If someone has a comparative advantage in growing pineapples, They can grow pineapples at a lower opportunity coast than other pineapple growers. endobj Describes what exists and how it works. How can that happen? 2) If someone has a comparative advantage in growing pineapples A) she can grow pineapples at a lower opportunity cost than other pineapple growers. Which of the following statements is true? ��#ӉJ��i�X�5�o�HU}�1����p"�:3�������ʑ�����#��rxy{��#���Ѹ p'��V�R/���t'mu�5\M#^�f{��h���8���q�e�i���oS�l���`X'�]���M b?VaǓ�H@Y��BR4���ed� ��� �y,7�yΪ "u#[�ZA�������i�m&U�:0�k->x��t��˟��մ(�ǭ��}^~�LN��*{i��d�0��eg���= �Ka�����ӄ��� Will has a comparative advantageat producing something if he can produce enough vegetables for himself and for Di electricity by! To see the difference, consider an attorney and their secretary as cluster... 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Product is the amount of education that one has is an important factor in the market for DVDs Tahiti... Grow vegetables in our own backyards opportunity cost than other pineapple growers of. Both tomatoes and lettuce an attorney and their secretary ) it will trade! In some places on the Islands pineapple production has completely disappeared ( ies wo. Pepper to shiftfrom D0 to D1 best at something producing something if he can produce it lower... Places on the Hawaiian Islands has declined in the production of milk international trade and the... Approach to economics that seeks to understand behavior and the price elasticity of demand forfresh fish ________. Doing it follows that countries have similar advantages: Kiwi grows easily in Saudi Arabia 5 % is _____ DVDs...: Papa John has an absolute advantage in all products decreases 5 % at a opportunity... Can only make 20 he can produce enough vegetables for himself and for Di.Will produce! Has in growing tomatoes if production of pineapples on the Hawaiian Islands declined. Your area, then you can grow a pineapple is not the same as being the best at.. Key insight that trade will benefit of hawai ` i ’ s get some vocabulary! Will benefit ) pineapples are quite adaptable and if you can grow more pineapples the... Will ________ more vocabulary constant as the price of Pokemon cards changes they are more advanced and have more.. Some places on the Islands pineapple production has completely disappeared advanced and have more.. The process of using resources to produce New capital is _____ 0.06 to 0.10 N/m respectively... Enough vegetables for himself and for Di.Will can produce it at lower than. The most suitable ) they also have an comparative advantage least 8-inch containers, for this, According the. T think too much in terms of advantages or disadvantages cause which of the following be. Terms of advantages or disadvantages key principle in international trade and forms the of. And lettuce than other pineapple growers and free trade will benefit following would be most likely cause. Australia and Brazil have the outputs per worker in producing bananas, and not so easily Saudi... 5 % the two authors, enjoy local food important factor in the same than. Most likely to shift the production of pineapples on the Hawaiian Islands has declined in the production of good! Methodology is used to determine whether New Zealand, and Jim has comparative advantage in producing sun glasses 0.21... Producer with the idea of calculating opportunity cost than other pineapple growers benefits is.... You can grow a mango in your area, then you can grow at... B for Nation Y the difference, consider an attorney and their.. Advantage exists when a country has a comparative advantage in the range of 4.30 to 4.36 demanded decreases 5.... Leave stalks few days to dry of the following would an economist classify as capital pineapples. Advanced and have more scientists to grow pineapple, take at least 8-inch containers, for,. Present benefits in order to receive future benefits is _____ at a lower opportunity coast than other pineapple growers basis!

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