Global supply chains and comparing economies

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

1. Read this first

   Hours of work to make one unit (made up)

   Good	Kesh	Loma
   Cloth (one bolt)	2	6
   Grain (one sack)	4	8

   Note: Kesh and Loma are made up. Card A: Each country has 240 hours of work to use. Card B: A country has an absolute advantage in a good when it makes the good with fewer hours. Opportunity cost is what must be given up: if a pencil takes 1 hour and a notebook takes 3, making one notebook costs 3 pencils. Card C: A country has a comparative advantage in a good when its opportunity cost of making it is lower. Card D: A bicycle (made up) is built in five steps in five places: steel in Ore Valley, tubes in Pipetown, wheels in Rimport, assembly in Mill City and sale in Shoreview. Each step needs the product of the one before it. Card E: Mill City keeps wheels for 5 days of assembly. A port closure delays the next wheel shipment from Rimport by 12 days.

2. 1.

   Bo finds what Loma gives up to make one sack of grain. Which statement is right?

   • Two bolts of cloth, the same as Kesh, because the same two goods are traded by both countries
   • Eight bolts of cloth: a sack takes 8 hours, so it costs 8 bolts of cloth
   • About 0.75 bolt of cloth: a bolt takes 6 hours and a sack takes 8, so a sack is 6 over 8
   • About 1.3 bolts of cloth: a sack takes 8 hours and a bolt takes 6
3. 2.

   Each country has 240 hours (card A). Esme asks how many bolts Loma gives up to make 10 sacks of grain. Which answer fits?

   • About 480 bolts: 10 sacks take 80 hours, and each bolt takes 6, so multiply 80 by 6
   • 10 bolts: one bolt for each sack, since both goods are traded one for one
   • About 13 bolts: 10 sacks take 80 hours, and 80 hours could make 80 over 6 bolts
   • 80 bolts: 10 sacks take 80 hours, and each hour could make one bolt of cloth
4. 3.

   Kesh needs fewer hours than Loma for both goods. Jun asks who has the comparative advantage in grain. Which answer fits card C?

   • Both, because each country can make grain with the hours it has
   • Loma: a sack costs it about 1.3 bolts, against 2 bolts for Kesh
   • Neither, because Kesh is better at both goods and so has the advantage in each
   • Kesh, because it needs fewer hours (4) than Loma (8) to make a sack of grain
5. 4.

   Kira asks who has the comparative advantage in cloth. Which answer fits card C?

   • Kesh, because it makes a bolt in 2 hours, the same as it makes two other things
   • Loma, because a bolt costs it 6 hours and the higher number means more production
   • Kesh: a bolt costs it 0.5 sack, against 0.75 sack for Loma
   • Neither, because Loma has the comparative advantage in grain and so lacks it in cloth
6. 5.

   Kesh is better at both goods. Luz asks whether Kesh gains by trading with Loma. Which answer fits?

   • No: Loma is worse at both goods, so trading with Loma would waste Kesh's hours
   • Yes: Kesh gains by making cloth and buying grain from Loma, whose grain costs less
   • Yes, but Loma gains and Kesh does not, because Kesh is better at both goods
   • Yes: Kesh should make grain and buy cloth, because grain takes more hours to make
7. 6.

   Card E: Mill City holds 5 days of wheels, and Rimport's shipment is 12 days late. Milo asks how long assembly stops. Which answer is right?

   • Twelve days, the full length of the delay, since stock does not change when wheels arrive
   • Seven days: the stock covers the first 5 of the 12 days of delay
   • Five days, the length of the stock, since that is how long the wheels last
   • Seventeen days, the stock plus the delay, since waiting adds the two together
8. 7.

   The wheel shipment from Rimport is delayed. Noah asks which steps of card D are delayed. Which answer fits?

   • Tubes and wheels, because they are the two parts that go into the frame
   • Five steps, because one late step stops the whole chain from start to end
   • Assembly and the sale, which come after wheels; steel and tubes come before
   • Just wheels, because the late shipment is Rimport's own and nothing else is affected
9. 8.

   The chain makes steel, tubes, wheels, assembly and sale in five places. Ren asks what the five places show about trade. Which statement fits?

   • The five places show that trade lowers the cost of each step by the same amount, whatever it is
   • Each place is independent, so a delay in one place does not reach the others
   • Each place does one step, and trade links them, so a delay in one place reaches later places
   • A delay in one place reaches the earlier places too, including steel and tubes
10. 9.

    A student says Kesh should make both goods and skip trade. Tala tests it with card A's 240 hours. Which reply is best?

    • The student is right: 240 hours are enough to make 60 sacks and 120 bolts together
    • The student is wrong: Kesh has too few hours to make both goods, so it must trade
    • The student is right: a country better at both goods gains nothing from trade, so skip it
    • Kesh's 240 hours are fixed, so trade lets it spend each hour where its cost is lowest
11. 10.

    Zee lists questions about Kesh and Loma. Which question can the chart not answer?

    • How many bolts one sack costs Loma; the chart does not allow that to be found
    • How many bolts and sacks each country wants to buy; the chart gives hours, not demand
    • Which country has an absolute advantage in grain; the chart cannot show comparisons
    • Which country needs fewer hours for a bolt; the chart gives hours per unit for both