Practice Questions
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If Country A can produce 10 units of cloth or 5 units of wine, and Country B can produce 6 units of cloth or 3 units of wine, which country has a comparative advantage in producing cloth?
Country A has a lower opportunity cost for making cloth. Other options are incorrect because Some might think Country B is better at cloth, but it act...
In a market where two countries specialize based on comparative advantage, how does economic efficiency relate to their trade dynamics?
When countries focus on what they do best, they use their resources wisely. Other options are incorrect because This idea suggests that countries will...
Which of the following statements best explains how comparative advantage impacts trade decisions and economic benefits?
Comparative advantage means a country can produce something at a lower opportunity cost. Other options are incorrect because This idea suggests only f...
In a trade scenario where two countries, A and B, have differing opportunity costs for producing two goods, which of the following statements best reflects the concept of comparative advantage and the potential gains from trade?
Country B should focus on making good X, while Country A makes good Y. Other options are incorrect because The mistake here is thinking that having an...
In international trade, if Country A can produce cars more efficiently than Country B, but Country B has a lower opportunity cost in producing textiles, how should both countries engage in trade to benefit from their comparative advantages?
Country A should make cars since it does that best. Other options are incorrect because This idea suggests one country should do everything; This opti...
Which of the following scenarios best illustrates absolute advantage?
Country A makes more cars in the same time than Country B. Other options are incorrect because This option compares production of two different items;...
Which of the following statements best defines comparative advantage?
Comparative advantage means a country can make something with less sacrifice than another country. Other options are incorrect because This option con...
Which of the following best describes the concept of opportunity cost in the context of comparative and absolute advantage?
Opportunity cost is what you give up when you choose one option over another. Other options are incorrect because This option confuses total costs wit...
If Country A specializes in producing cars while Country B specializes in cocoa, what is the underlying reason for this specialization based on their production capabilities?
Country B can make cocoa at a lower opportunity cost than Country A. Other options are incorrect because This option suggests that if one country is b...
Country X can produce either 6 units of wine or 3 units of cheese with the same resources, while Country Y can produce either 4 units of wine or 2 units of cheese. If both countries decide to specialize based on their comparative advantages and then trade, which scenario best illustrates the principle of comparative advantage?
Country X is better at making wine, and Country Y is better at making cheese. Other options are incorrect because This option suggests that both count...
Which of the following statements accurately describe the concepts of comparative and absolute advantage? Select all that apply.
All the statements misunderstand the concepts of comparative and absolute advantage. Other options are incorrect because This statement confuses absol...
If Country A has an absolute advantage in producing cars while Country B has a comparative advantage in producing cocoa, then Country A is to cars as Country B is to what?
Country B is best at making cocoa, just like Country A is best at making cars. Other options are incorrect because This option confuses the idea of wh...
Order the following steps to illustrate how countries can benefit from trade based on comparative and absolute advantage.
First, countries need to know what they can make best with what they have. Other options are incorrect because Some might think figuring out costs com...
Country A can produce either 10 tons of rice or 5 tons of wheat with its resources, while Country B can produce either 15 tons of rice or 10 tons of wheat. Which category does Country A belong to regarding comparative advantage, and why?
Country A gives up less when it produces rice. Other options are incorrect because Some might think Country A is better at making rice; This option su...
In international trade, a country that can produce a good at a lower _____ compared to another country has a comparative advantage.
Comparative advantage means producing something at a lower opportunity cost. Other options are incorrect because Some might think absolute cost is the...
Country A can produce either 10 units of wine or 5 units of cheese using the same resources. Country B can produce either 6 units of wine or 2 units of cheese. Which country has a comparative advantage in cheese production?
Country B has a lower opportunity cost for making cheese. Other options are incorrect because Some might think Country A is better at making cheese; T...
Which scenario best illustrates the principle of comparative advantage?
This option shows that each country can produce something at a lower cost than the other. Other options are incorrect because This option suggests tha...
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