Comparative and Absolute Advantage – Flashcards
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A producer with a comparative advantage has the ability to produce a good or service at
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a lower opportunity cost than any competitor can
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Which describes a way in which consumers most likely benefit from producers' absolute advantage?
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Prices decrease as a result of increased production efficiencies.
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This table shows the production possibility schedule for several toothpaste companies.
Use the numbers to place the companies in order of greatest comparative advantage to least comparative advantage in producing small tubes of toothpaste.
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2, 1, 3, 4
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Which best explains why producers choose to specialize? Check all that apply.
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to gain a comparative advantage
to increase efficiency
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is the act of limiting the types of goods and services produced.
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specialization
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All else being equal, which bakery has the absolute advantage?
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Uncle John's
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Which calculation helps determine which producer has the absolute advantage?
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Amount produced divided by resources used
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Which company has the comparative advantage in producing large tubes of toothpaste?
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Mmmint
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The term , often used in conjunction with absolute advantage, is defined as making the best use of resources.
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efficiency
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Which most likely results from producers engaging in specialization?
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Producers reduce their costs.
