Question 1

The theory of ________ is credited to David Ricardo.

Accepted Answer

The theory of comparative advantage is credited to David Ricardo, who argued that countries should specialize in producing goods where they have a lower opportunity cost and trade with other countries, rather than trying to produce everything themselves. This theory has become a cornerstone of modern international trade theory.

Question 2

Suppose that Greece and Portugal are both engaged in the production of grapes and figs, and that Greece has an absolute advantage in the production of both goods. If Portugal has a lower opportunity cost for producing figs, then

Accepted Answer

Portugal has a comparative advantage in the production of figs, meaning that it can produce figs at a lower opportunity cost than Greece. This implies that if Portugal specializes in the production of figs and Greece specializes in the production of grapes, both countries can produce more of both goods through trade than they could on their own. Therefore, specialization and trade between the two countries can be mutually beneficial.

Question 3

The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage

Accepted Answer

When both countries specialize in their comparative advantage goods, they will increase their production efficiency and output, which leads to an increase in both production and consumption of both goods. Therefore, the best answer is option D.

Question 4

Thailand has a comparative advantage in rice and an absolute advantage in both rice and cell phones. Indonesia has a comparative advantage in cell phones. According to this scenario

Accepted Answer

Thailand should export rice because it has a comparative advantage in this product. However, Thailand should import cell phones from Indonesia since it has an absolute advantage in both rice and cell phones. Meanwhile, Indonesia should focus on exporting cell phones as it has a comparative advantage in this product, and should import rice from Thailand. Therefore, option C is the most appropriate choice.

Question 5

According to the theory of comparative advantage, a country exports goods when it can produce those goods ________ than other countries.

Accepted Answer

The theory of comparative advantage suggests that a country should produce and export goods that it can produce at a lower opportunity cost (i.e. the cost of producing one good in terms of the foregone production of another good) than other countries. This allows the country to specialize in the production of those goods and trade with other countries for goods in which they have a comparative disadvantage.

Question 6

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

Accepted Answer

This is because each country has a comparative advantage in their respective industries, and by specializing in their area of strength and trading with each other, both countries can benefit and increase their overall output and economic welfare. Argentina can produce more beef with the same resources as Guatemala, and Guatemala can produce more bananas with the same resources as Argentina. Thus, both countries can benefit from trade by focusing on producing what they are relatively efficient at and trading for the other good.

Question 7

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. ________ has a comparative advantage in tea and ________ has an absolute advantage in tea.

Accepted Answer

Comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost than another country. Looking at the table, we can see that India has an opportunity cost of 2 bushels of cashews for every pound of tea produced while Vietnam has an opportunity cost of only 1 bushel of cashews for every pound of tea produced. Therefore, Vietnam has a comparative advantage in tea.

Absolute advantage refers to a country's ability to produce a good using fewer resources than another country. Looking at the table, we cannot determine which country has an absolute advantage in tea as we do not know the amount of resources required to produce a unit of tea in each country. Therefore, the answer is that neither country has an absolute advantage in tea.

Question 8

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. If both countries specialize and trade with each other, Vietnam will export ________ and India will import ________.

Accepted Answer

The answer of Refer to the information provided in Table...

Question 9

The United States imports DVD recorders from China and China imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that

Accepted Answer

The theory of comparative advantage suggests that each country will specialize in and export the goods for which it has a lower opportunity cost of production. Therefore, if the United States exports computer chips to China, it implies the U.S. has a comparative advantage in producing computer chips, meaning the opportunity cost of producing them is lower in the U.S. than in China. Conversely, if China exports DVD recorders to the U.S., it suggests China has a comparative advantage in producing DVD recorders.

Question 10

The United States would have an absolute advantage compared to Canada in the production of wheat if

Accepted Answer

An absolute advantage exists when one country is capable of producing a good using fewer resources than another country. Therefore, if the United States can produce wheat using fewer resources than Canada, then it has an absolute advantage in wheat production. The other options are not necessarily indicative of an absolute advantage.

Question 11

If the slopes of the ________ involving corn and wheat in the United States and Canada are equal, specialization does not benefit either country.

Accepted Answer

Production Possibility Frontiers (PPF) represent the trade-off between producing two goods. If the slopes of the PPFs of corn and wheat are equal in the US and Canada, then the opportunity cost of producing one good instead of the other is the same in both countries. This means that neither country has a comparative advantage in producing either good, and specialization does not benefit either country.

Question 12

India has a comparative advantage compared to Spain in the production of clothing if

Accepted Answer

The answer of India has a comparative advantage compared to...

Question 13

If Mexico has a comparative advantage in the production of oil compared to France, then

Accepted Answer

Comparative advantage means that a country can produce a good or service at a lower opportunity cost than another country. Therefore, Mexico can produce oil at a lower opportunity cost than France. It does not necessarily mean that Mexico has an absolute advantage in the production of oil (choice A) or that France cannot produce oil (choice D). It simply means that Mexico has a lower opportunity cost in producing oil compared to France. Choice B is incorrect as it contradicts the premise that Mexico has a comparative advantage in the production of oil.

Question 14

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. In India, the opportunity cost of

Accepted Answer

The answer of Refer to the information provided in Table...

Question 15

Suppose that Paraguay and Guyana are both engaged in the production of soybeans and grapefruit, and that Paraguay has an absolute advantage in the production of both goods. If Guyana has a comparative advantage in the production of soybeans, then Guyana

Accepted Answer

Comparative advantage refers to the ability of a country to produce a specific commodity at a lower opportunity cost than another country. Therefore, if Guyana has a comparative advantage in soybean production, it means that it can produce soybeans at a lower opportunity cost compared to grapefruit production. In this case, Guyana should specialize in producing soybeans and trade with Paraguay for grapefruits, in which Paraguay has an absolute advantage. This way, both countries can benefit from the gains of trade and increase their overall production efficiency.

Question 16

According to ________, a country should specialize and export goods with the lowest opportunity cost.

Accepted Answer

The theory of comparative advantage states that a country should specialize in producing and exporting goods with the lowest opportunity cost, i.e. the goods that they can produce at a lower cost compared to other countries. This allows for increased efficiency and gains from trade. The other options do not directly relate to this concept.

Question 17

The advantage in the production of a product enjoyed by one country over another when it uses ________ to produce that product than the other country does is an absolute advantage.

Accepted Answer

Absolute advantage occurs when a country can produce a good using fewer resources than another country.

Question 18

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. The most that Vietnam will be willing to pay for a bushel of cashews is

Accepted Answer

From the table, we can see that Vietnam is willing to trade a maximum of 75 bushels of cashews for 562.5 lbs. of tea. Therefore, the maximum price Vietnam is willing to pay for a bushel of cashews is 562.5/75 = 7.5 lbs. of tea.

Question 19

When one country can produce a product at a ________ cost in terms of other goods, that country is said to have a(n) ________ advantage.

Accepted Answer

A country has a comparative advantage when it can produce a product at a lower opportunity cost in terms of other goods compared to other countries.

Question 20

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 33.5 
-Refer to Table 33.5. In Vietnam, the opportunity cost of

Accepted Answer

In Vietnam, the opportunity cost of a lb. of tea is 2/15 of a bushel of cashews.

Quiz 33: International Trade, Comparative Advantage, and Protectionism

The theory of ________ is credited to David Ricardo.

Suppose that Greece and Portugal are both engaged in the production of grapes and figs, and that Greece has an absolute advantage in the production of both goods. If Portugal has a lower opportunity cost for producing figs, then

The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage

Thailand has a comparative advantage in rice and an absolute advantage in both rice and cell phones. Indonesia has a comparative advantage in cell phones. According to this scenario

According to the theory of comparative advantage, a country exports goods when it can produce those goods ________ than other countries.

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. has a comparative advantage in tea and has an absolute advantage in tea.

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. If both countries specialize and trade with each other, Vietnam will export and India will import .

The United States imports DVD recorders from China and China imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that

The United States would have an absolute advantage compared to Canada in the production of wheat if

If the slopes of the ________ involving corn and wheat in the United States and Canada are equal, specialization does not benefit either country.

India has a comparative advantage compared to Spain in the production of clothing if

If Mexico has a comparative advantage in the production of oil compared to France, then

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. In India, the opportunity cost of

Suppose that Paraguay and Guyana are both engaged in the production of soybeans and grapefruit, and that Paraguay has an absolute advantage in the production of both goods. If Guyana has a comparative advantage in the production of soybeans, then Guyana

According to ________, a country should specialize and export goods with the lowest opportunity cost.

The advantage in the production of a product enjoyed by one country over another when it uses ________ to produce that product than the other country does is an absolute advantage.

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. The most that Vietnam will be willing to pay for a bushel of cashews is

When one country can produce a product at a cost in terms of other goods, that country is said to have a(n) advantage.

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. In Vietnam, the opportunity cost of

Quiz 33: International Trade, Comparative Advantage, and Protectionism

The theory of ________ is credited to David Ricardo.

Suppose that Greece and Portugal are both engaged in the production of grapes and figs, and that Greece has an absolute advantage in the production of both goods. If Portugal has a lower opportunity cost for producing figs, then

The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage

Thailand has a comparative advantage in rice and an absolute advantage in both rice and cell phones. Indonesia has a comparative advantage in cell phones. According to this scenario

According to the theory of comparative advantage, a country exports goods when it can produce those goods ________ than other countries.

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. ________ has a comparative advantage in tea and ________ has an absolute advantage in tea.

The United States imports DVD recorders from China and China imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that

The United States would have an absolute advantage compared to Canada in the production of wheat if

If the slopes of the ________ involving corn and wheat in the United States and Canada are equal, specialization does not benefit either country.

India has a comparative advantage compared to Spain in the production of clothing if

If Mexico has a comparative advantage in the production of oil compared to France, then

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. In India, the opportunity cost of

Suppose that Paraguay and Guyana are both engaged in the production of soybeans and grapefruit, and that Paraguay has an absolute advantage in the production of both goods. If Guyana has a comparative advantage in the production of soybeans, then Guyana

According to ________, a country should specialize and export goods with the lowest opportunity cost.

The advantage in the production of a product enjoyed by one country over another when it uses ________ to produce that product than the other country does is an absolute advantage.

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. The most that Vietnam will be willing to pay for a bushel of cashews is

When one country can produce a product at a ________ cost in terms of other goods, that country is said to have a(n) ________ advantage.

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. In Vietnam, the opportunity cost of

Refer to the information provided in Table 33.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 33.5 -Refer to Table 33.5. has a comparative advantage in tea and has an absolute advantage in tea.

When one country can produce a product at a cost in terms of other goods, that country is said to have a(n) advantage.