Practice Questions
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Which of the following best describes a scenario in which one country has an absolute advantage over another in the production of a good, considering factor endowments?
Country A has an absolute advantage if it can make more of Good X using the same resources. Other options are incorrect because This option confuses a...
Which of the following scenarios best illustrates the relationship between factor endowments and economic interdependence in the context of absolute and comparative advantage?
Country A has lots of farmland, so it grows food well. Other options are incorrect because This option suggests that even with resources, a country mi...
According to David Ricardo's theory of comparative advantage, which of the following scenarios best illustrates the concept of opportunity cost?
This example shows opportunity cost clearly. Other options are incorrect because This option suggests both countries have the same cost, which isn't t...
In the context of international trade, which of the following scenarios best illustrates the concept of comparative advantage and its relationship with terms of trade and trade-offs?
This example shows how two countries can benefit by focusing on what they do best. Other options are incorrect because This option suggests that produ...
According to David Ricardo's theory of comparative advantage, how does the production possibilities frontier (PPF) illustrate the benefits of trade between two countries?
Countries can gain more by focusing on what they make best. Other options are incorrect because This idea suggests countries should only make what the...
Which country is said to have an absolute advantage in the production of a good if it can produce more of that good using the same amount of resources compared to another country?
A country has an absolute advantage if it can make more of something with the same resources. Other options are incorrect because Some might think usi...
Which of the following scenarios best illustrates the concept of comparative advantage?
Country B can produce wheat with less sacrifice than Country A. Other options are incorrect because This option suggests both countries are equally go...
If Country A can produce 10 units of cloth or 5 units of wine, while Country B can produce 6 units of cloth or 3 units of wine, which country has a comparative advantage in producing wine?
Country B has a comparative advantage in wine. Other options are incorrect because Some might think Country A is better at making wine; The idea that ...
Arrange the following steps in the correct sequence to determine which country has a comparative advantage in producing wheat and cloth: A) Calculate the opportunity cost of producing wheat in terms of cloth for both countries. B) Identify which country has a lower opportunity cost for each good. C) Determine the total production capabilities of both countries for wheat and cloth. D) Conclude which country should specialize in which good based on opportunity costs.
First, we need to know how much each country can produce. Other options are incorrect because This option starts with calculating opportunity costs be...
Country A can produce 150 bushels of corn or 450 yards of silk, while Country B can produce 100 bushels of corn or 300 yards of silk. Which of the following statements correctly classifies the production capabilities of these countries based on absolute and comparative advantage?
Country A can make more corn and silk than Country B. Other options are incorrect because This answer confuses comparative advantage with absolute adv...
In a trade scenario, if Country A has an absolute advantage in producing both wheat and cloth, what is the most likely outcome regarding trade with Country B, which has a comparative advantage in cloth?
Country B can make cloth more efficiently than wheat. Other options are incorrect because This suggests Country A will stop making everything, which i...
If country A specializes in producing goods where it has a comparative advantage, what is the most likely outcome for the trade relationship with country B, which specializes in different goods?
When countries focus on what they do best, they can produce more goods. Other options are incorrect because Some might think one country will always w...
Absolute advantage in economic terms is to production efficiency as comparative advantage is to:
Comparative advantage is about making choices. Other options are incorrect because Some might think comparative advantage is about limits on trade; Pe...
In the context of international trade, when a country can produce a good at a lower opportunity cost than another country, it is said to have a __________ advantage.
A country has a comparative advantage when it can make something at a lower cost than another country. Other options are incorrect because Some might ...
If Country A can produce 50 tons of rice or 100 tons of wheat, and Country B can produce 30 tons of rice or 90 tons of wheat, which country has a comparative advantage in rice production?
Country B has a lower opportunity cost for rice. Other options are incorrect because Some might think Country A is better because it makes more rice; ...
Which of the following statements accurately describe the implications of absolute and comparative advantage in international trade? Select all that apply.
None of the statements accurately describe the concepts of absolute and comparative advantage. Other options are incorrect because Some think that hav...
Country A can produce 50 tons of rice or 100 tons of fish, while Country B can produce 30 tons of rice or 90 tons of fish. Which country has an absolute advantage in the production of fish, and how does this affect their trade decisions?
Country A can produce more fish than Country B. Other options are incorrect because This answer confuses who can make more fish; This answer is wrong ...
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