Question 1

Assume,for Mexico,that the domestic price of beets without international trade is higher than the world price of beets.This suggests that,in the production of beets,

Accepted Answer

If the domestic price of beets in Mexico is higher than the world price, it suggests that it is more expensive for Mexico to produce beets than it is for other countries. Other countries would have a comparative advantage over Mexico in producing beets and therefore Mexico would import beets from these other countries.

Question 2

Assume,for England,that the domestic price of wine without international trade is higher than the world price of wine.This suggests that,in the production of wine,

Accepted Answer

If the domestic price of wine in England is higher than the world price, it suggests that other countries have a comparative advantage over England in the production of wine. Therefore, England will import wine from other countries where it is cheaper to produce.

Question 3

Suppose Japan exports cars to Russia and imports wine from France.This situation suggests

Accepted Answer

In this scenario, Japan is able to export cars to Russia, suggesting that it has a comparative advantage in producing cars relative to Russia. Similarly, Japan is importing wine from France, suggesting that France has a comparative advantage in producing wine relative to Japan. Therefore, the correct answer is B, which states that "Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine."

Question 4

If the world price of coffee is lower than Colombia's domestic price of coffee without trade,then Colombia

Accepted Answer

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, it means that Colombia can buy coffee from other countries at a lower price than producing it domestically. Therefore, it is economically efficient for Colombia to import coffee rather than produce it domestically.

Question 5

Spain allows trade with the rest of the world.We know that Spain has a comparative advantage in producing olive oil if we know that

Accepted Answer

If Spain has a comparative advantage in producing olive oil, the world price of olive oil should be lower than the cost of producing olive oil in Spain. However, if the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed, this indicates that Spain cannot produce olive oil at a competitive price without trade. Thus, Spain has a comparative advantage in producing olive oil and is able to benefit from trade by exporting olive oil and importing other goods in exchange for olive oil at a lower cost than if they were to produce it domestically without trade. Option B is the only choice that reflects this situation.

Question 6

By comparing the world price of pecans to India's domestic price of pecans,we can determine whether India

Accepted Answer

If the world price of pecans is lower than India's domestic price, then India will import pecans. If the world price of pecans is higher than India's domestic price, then India will export pecans. If India has a comparative advantage in producing pecans, then it will be able to produce pecans at a lower cost than other countries.

Question 7

The nation of Isolani forbids international trade.In Isolani,you can exchange 1 car for 5 motorcycles.In other countries,you can exchange 1 car for 4 motorcycles.These facts indicate that

Accepted Answer

The answer of The nation of Isolani forbids international trade.In...

Question 8

Assume the nation of Teeveeland does not trade with the rest of the world.By comparing the world price of televisions to the price of televisions in Teeveeland,we can determine whether

Accepted Answer

If the price of televisions in Teeveeland is lower than the world price, it means Teeveeland has a comparative advantage in producing televisions. This is because Teeveeland can produce televisions at a lower opportunity cost than other countries. If the price of televisions in Teeveeland is higher than the world price, it means Teeveeland does not have a comparative advantage in producing televisions. Consumer and producer surplus are not relevant in this question.

Question 9

Suppose Jamaica has an absolute advantage over other countries in producing sugar,but other countries have a comparative advantage over Jamaica in producing sugar.If trade in sugar is allowed,Jamaica

Accepted Answer

Even though Jamaica has an absolute advantage in producing sugar, it would still import sugar from other countries because they have a comparative advantage in producing sugar, which means they can produce it at a lower opportunity cost than Jamaica. By importing sugar, Jamaica can then allocate their resources towards producing goods and services that they have a comparative advantage in, improving their overall welfare.

Question 10

Assume,for Japan,that the domestic price of automobiles without international trade is lower than the world price of automobiles.This suggests that,in the production of automobiles,

Accepted Answer

Japan has a comparative advantage in automobile production because its domestic price is lower than the world price, indicating it can produce automobiles more efficiently than other countries. Therefore, Japan will export automobiles.

Question 11

If the world price of coffee is higher than Colombia's domestic price of coffee without trade,then Colombia

Accepted Answer

If the world price of coffee is higher than Colombia's domestic price of coffee without trade, it indicates that other countries value coffee more than Colombia does. This means that Colombia has a comparative advantage in producing coffee, and exporting it would allow them to earn higher profits. Therefore, the best choice for Colombia is to export coffee.

Question 12

A country has a comparative advantage in a product if the world price is

Accepted Answer

The answer of A country has a comparative advantage in...

Question 13

Jamaica has a comparative advantage in the production of aluminum,but currently allows no international trade in aluminum.We can conclude that

Accepted Answer

A comparative advantage implies that Jamaica can produce aluminum at a lower opportunity cost than other countries, suggesting that the domestic price is lower than the world price.

Question 14

The nation of Farmland forbids international trade.In Farmland,you can exchange 1 pound of beef for 2 pounds of pepper.In other countries,you can exchange 1 pound of beef for 4 pounds of pepper.These facts indicate that

Accepted Answer

Farmland has a comparative advantage in producing beef because it can produce beef at a lower opportunity cost than other countries. In Farmland, 1 pound of beef only costs 2 pounds of pepper to produce, while in other countries, it costs 4 pounds of pepper. This means that Farmland would have to give up producing 2 pounds of pepper to produce 1 pound of beef, while other countries would have to give up producing 4 pounds of pepper to produce the same amount of beef. Therefore, Farmland is better off producing beef and trading it for pepper with other countries, as it can obtain more pepper for the same amount of beef than it could produce domestically.

Question 15

Suppose Brazil has a comparative advantage over other countries in producing almonds,but other countries have an absolute advantage over Brazil in producing almonds.If trade in almonds is allowed,Brazil

Accepted Answer

Brazil will export almonds because it has a comparative advantage, meaning it can produce almonds at a lower opportunity cost than other countries, even if it doesn't have an absolute advantage.

Question 16

Assume,for England,that the domestic price of wine without international trade is lower than the world price of wine.This suggests that,in the production of wine,

Accepted Answer

When the domestic price of a good is lower than the world price, it indicates that the country has a comparative advantage in producing that good, leading to exports.

Question 17

If a country is an exporter of a good,then it must be the case that

Accepted Answer

If a country is an exporter of a good, then it is able to sell the good at a higher price in the international market (world price) than its domestic price. This is because the country has a comparative advantage in producing the good, and can produce it at a lower cost than other countries. As a result, the country benefits from the trade by earning more revenue from exports than it would by selling the good domestically.

Question 18

Costa Rica allows trade with the rest of the world.We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Accepted Answer

The answer of Costa Rica allows trade with the rest...

Question 19

Suppose Brazil has an absolute advantage over other countries in producing almonds,but other countries have a comparative advantage over Brazil in producing almonds.If trade in almonds is allowed,Brazil

Accepted Answer

Absolute advantage means that Brazil is able to produce almonds using fewer resources (such as labor) than other countries. However, comparative advantage takes into account the opportunity cost of producing almonds. If other countries have a lower opportunity cost, they will specialize in producing almonds and Brazil will specialize in producing other goods. This leads to the situation where Brazil would import almonds from other countries that have a comparative advantage in producing almonds. Therefore, the correct answer is A.

Question 20

Suppose Japan exports televisions to the United States and imports sugar from Argentina.This situation suggests

Accepted Answer

The fact that Japan exports televisions to the United States suggests that Japan has a comparative advantage relative to the US in producing televisions. Similarly, the fact that Japan imports sugar from Argentina suggests that Argentina has a comparative advantage relative to Japan in producing sugar. Therefore, the best choice is A. The other choices do not reflect the situation described in the question.

Quiz 9: Application International Trade: The Determinants of Trade