Practice Questions
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What is one potential benefit of reducing trade barriers in an economy that specializes in certain goods?
When trade barriers are lowered, countries can produce goods more efficiently. Other options are incorrect because Some might think that higher taxes ...
Which of the following statements best describes how comparative advantage contributes to productivity in an economy?
When countries specialize in what they do best, they can make more goods efficiently. Other options are incorrect because Some people think countries ...
How does the concept of opportunity cost relate to the benefits of specialization and trade in a market economy?
When people focus on what they do best, they can make things more efficiently. Other options are incorrect because Some might think opportunity cost d...
How does comparative advantage influence market exchange and affect trade barriers between countries?
Comparative advantage means countries should focus on making things they can produce cheaply. Other options are incorrect because Some might think cou...
How does comparative advantage contribute to economic efficiency and consumer benefits in international trade?
When countries focus on making what they are best at, they can produce more efficiently. Other options are incorrect because Some might think that if ...
What is one primary benefit of specialization in an economy?
Specialization means people or businesses focus on what they do best. Other options are incorrect because Some might think specialization leads to few...
What is one major benefit of specialization in trade?
When people or countries focus on making one thing, they get really good at it. Other options are incorrect because Some might think that specializati...
What is the main advantage of specialization in trade according to the principle of comparative advantage?
Specialization helps countries focus on what they do best. Other options are incorrect because Some might think specialization means no trade agreemen...
If Country A specializes in producing wheat and Country B specializes in producing cloth, then Country A's trade relationship with Country B is most similar to which of the following scenarios? A:B :: C:?
Country A trades wheat for cloth from Country B. Other options are incorrect because This option suggests both countries focus on different products; ...
Which of the following statements accurately describe the benefits of specialization and trade? Select all that apply.
None of the statements accurately describe the benefits of specialization and trade. Other options are incorrect because This suggests that specializa...
Arrange the following steps to illustrate the process of specialization and trade between two countries, A and B, where A has a comparative advantage in wheat and B has a comparative advantage in cloth: A) Country A specializes in wheat production, B) Country B specializes in cloth production, C) Both countries trade wheat for cloth, D) Each country benefits from lower opportunity costs.
Country A should focus on making wheat, while Country B makes cloth. Other options are incorrect because This option suggests that Country B starts fi...
If Country A specializes in wheat production and exports it to Country B, which of the following best explains the underlying reason for this trade arrangement?
Country A can grow wheat better and faster than Country B. Other options are incorrect because This answer suggests that Country A needs more wheat th...
If Country A specializes in wheat production due to its comparative advantage, what is the most likely consequence of this specialization on Country B?
When Country A focuses on making wheat, it can produce it more efficiently. Other options are incorrect because This answer suggests Country B will gr...
Country X produces coffee more efficiently than it produces tea, while Country Y can produce both coffee and tea but does so less efficiently. If Country X specializes in coffee and Country Y specializes in tea, what will be the likely outcome of their trade?
When each country focuses on what they do best, they can produce more. Other options are incorrect because This idea suggests that trading will hurt p...
When two countries engage in trade, each country should focus on producing goods in which they have a comparative __________ to maximize efficiency and benefits from trade.
Countries should make what they are best at. Other options are incorrect because Some might think focusing on weaknesses is smart, but it actually was...
If Country A specializes in wheat and Country B specializes in cloth, what is the primary reason they should trade?
When each country focuses on what they do best, they can produce more. Other options are incorrect because Some might think countries should make ever...
If Country A has a comparative advantage in wheat production and Country B has a comparative advantage in cloth production, it is true that Country A will never import cloth from Country B under any circumstances.
Countries can benefit from trading even if one is better at making everything. Other options are incorrect because This suggests that trade can't happ...
Which of the following scenarios best illustrates the benefits of specialization and trade based on comparative advantage?
When Country A focuses on making wheat, it can produce more of it efficiently. Other options are incorrect because This option shows a country produci...
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