Comparative and Absolute Advantage

Which describes a way in which consumers most likely benefit from producers’ absolute advantage?

Prices decrease as a result of increased production eficiencias.

A producer with a comparative advantage has the ability to produce a good or service at

….a lower opportunity cost than any competitor can.

It is better for businesses to have … opportunity costs, as it often gives them a comparative advantage.

lower

The term … , often used in conjunction with absolute advantage, is defined as making the best use of resources.

efficiency

This table shows the production possibility schedule for several toothpaste company
Which company has the comparative advantage in producing small tubes of toothpaste?

Bright White

Which scenario is the best example of an opportunity cost?

A computer company produces fewer laptops to meet tablet demand.

This table shows the production possibility schedule for several toothpaste company
Which company has the comparative advantage in producing large tubes of toothpaste?

Mmmint

… is the act of limiting the types of goods and services produced.

Specialization

A producer with an absolute advantage has the ability to produce a good or service at

a lower cost than any competitor can

Which most likely results from producers engaging in specialization?

Producers reduce their costs

Which best describes how producers benefit from specialization?

Producers can increase their profits.

This table shows the number of cookies several bakeries sell each day.
All else being equal, which bakery has the absolute advantage?

Uncle John’s

The term… , often used in conjunction with absolute advantage, is defined as making the best use of resources.

efficiency

What can a producer gain by specializing?

absolute advantage

Which calculation helps determine which producer has the absolute advantage?

Amount produced divided by resources used

Which of these best describes an opportunity cost?

a trade-off

Which best explains why producers choose to specialize? Check all that apply.

to gain a comparative advantage to increase efficiency

When discussing comparative and absolute advantage, which best describes specialization?

limiting the types of goods and services produced