Practice Questions
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Which of the following scenarios best illustrates the concept of comparative advantage?
This option shows how two countries can work together. Other options are incorrect because This option suggests that one country is better at everythi...
In a market where two countries specialize based on their comparative advantages, what is likely to happen to the overall market equilibrium when they engage in trade?
When countries trade based on what they do best, they can produce more goods together. Other options are incorrect because Some might think that trade...
How does specialization contribute to interdependence in international trade?
Specialization helps countries focus on making things they can produce best. Other options are incorrect because Some might think that specialization ...
In a market where two countries have different absolute advantages in producing goods, how does their interdependence affect market equilibrium?
When countries specialize in what they do best, they can trade with each other. Other options are incorrect because Some might think one country will ...
Which of the following scenarios best illustrates the principle of comparative advantage in relation to opportunity cost, absolute advantage, and resource allocation?
Country Y should focus on corn because it gives up less wheat than Country X. Other options are incorrect because This option confuses absolute advant...
Which of the following scenarios best illustrates the principle of comparative advantage?
Country A and Country B can produce different amounts of wine and cheese. Other options are incorrect because This option suggests both goods are made...
Which of the following scenarios best illustrates the concept of comparative advantage?
When Country A makes cars and Country B makes textiles, they both do what they are best at. Other options are incorrect because This option suggests t...
Which of the following best illustrates the principle of comparative advantage in specialization?
This option shows that a country should focus on making things it can produce most easily. Other options are incorrect because This option suggests a ...
Which of the following statements accurately describe the principles of comparative advantage and its implications for trade? Select all that apply.
None of the statements accurately explain comparative advantage. Other options are incorrect because This suggests that a country should only focus on...
If a country specializes in producing goods where it has a comparative advantage, what is the likely effect on its trade relationships with other countries?
When a country focuses on what it does best, it can trade with others for what they do best. Other options are incorrect because Some might think that...
If Country A can produce 10 cars or 5 trucks and Country B can produce 4 cars or 8 trucks, which country has a comparative advantage in producing trucks?
Country B has a lower opportunity cost for making trucks. Other options are incorrect because Some might think more trucks mean a better ability to pr...
Comparative Advantage:Absolute Advantage :: Specialization:?
When people or countries focus on what they do best, they use their resources better. Other options are incorrect because Some might think that focusi...
Consider two countries, Country A and Country B. Country A can produce 10 units of wine or 5 units of cloth with the same resources. Country B can produce 6 units of wine or 3 units of cloth. Which of the following classifications accurately reflects their comparative advantages and why?
Country B has a comparative advantage in cloth. Other options are incorrect because This answer confuses total production with opportunity cost; This ...
In trade, the principle that allows a country to produce a good at a lower opportunity cost than another is known as __________.
This principle means a country can make something more efficiently than others. Other options are incorrect because Some might think this is about bei...
Company A can produce 10 units of Product X or 5 units of Product Y in a day, while Company B can produce 8 units of Product X or 4 units of Product Y in the same time. If both companies specialize based on their comparative advantage, what should Company A produce to maximize overall production efficiency?
Company A is better at making Product X. Other options are incorrect because Some might think Company A should make Product Y since it exists; Mixing ...
Order the steps to determine which country should specialize in producing a good based on comparative advantage: A) Identify opportunity costs of producing goods in both countries. B) Compare the opportunity costs to find the lower one. C) Determine absolute advantages of both countries. D) Decide which country should specialize in which good based on the comparison.
First, you find out the opportunity costs for each country. Other options are incorrect because This option starts with absolute advantages, which are...
If Country A has a lower opportunity cost in producing wheat compared to Country B, how should they approach trade?
Country A should focus on making wheat. Other options are incorrect because Producing everything means wasting resources; Absolute advantage means you...
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