Question 1

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

Accepted Answer

The U.S. has a comparative advantage in pineapple production because its domestic price is lower than the world price, leading to exports.

Question 2

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

Accepted Answer

When the domestic price is lower than the world price, it indicates that Canada can produce wheat more efficiently than other countries, giving it a comparative advantage, leading to exports.

Question 3

Suppose England exports cars to Australia and imports cheese from Mexico.This situation suggests that

Accepted Answer

The situation described in the question suggests that England has a comparative advantage in producing cars and Australia has a comparative advantage in producing cheese. This is because England is exporting cars to Australia, which implies that England can produce cars more efficiently than Australia, while Australia can produce cheese more efficiently than England. Similarly, England is importing cheese from Mexico, which suggests that Mexico has a comparative advantage in producing cheese.

Question 4

By comparing the world price of horseradish to Cropland's domestic price of horseradish,we can determine whether Cropland

Accepted Answer

If the world price of horseradish is lower than Cropland's domestic price, Cropland will import horseradish. If the world price of horseradish is higher than Cropland's domestic price, Cropland will export horseradish. In either case, Cropland has a comparative advantage in producing horseradish.

Question 5

The nation of Fastbrooke forbids international trade.In Fastbrooke,you can exchange 1 television for 3 computers.In other countries,you can exchange 1 television for 2 computers.These facts indicate that

Accepted Answer

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

Question 6

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

Accepted Answer

By comparing the world price of corn to the price of corn in Cropland, we can determine whether Cropland has a comparative advantage in producing corn. If the world price of corn is lower than the price of corn in Cropland, then Cropland does not have a comparative advantage in producing corn and vice versa. This comparison does not provide any information regarding whether consumer surplus exceeds producer surplus or whether Cropland has an absolute advantage in producing corn.

Question 7

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

Accepted Answer

Even though Haiti has an absolute advantage in producing oranges, other countries have a lower opportunity cost of producing oranges (comparative advantage). Therefore, it is more beneficial for Haiti to import oranges from other countries and focus on producing goods in which they have a comparative advantage. By doing so, Haiti can increase the overall level of trade and benefit from the efficient allocation of resources.

Question 8

If the world price of sugar is lower than Brazil's domestic price of sugar without trade,then Brazil

Accepted Answer

If the world price of sugar is lower than Brazil's domestic price of sugar without trade, it means that other countries are able to produce sugar at a lower cost than Brazil. Therefore, Brazil should import sugar to take advantage of the lower world price and satisfy domestic demand at a lower cost.

Question 9

The nation of Woodland forbids international trade.In Woodland,you can exchange 1 pound of chicken for 5 pounds of salt.In other countries,you can exchange 1 pound of chicken for 7 pounds of salt.These facts indicate that

Accepted Answer

Woodland can exchange chicken for less salt domestically than internationally, indicating it has a comparative advantage in producing chicken.

Question 10

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, it means that it is selling the good to other countries at a price higher than its domestic price, which indicates that the world price is greater than its domestic price.

Question 11

Suppose the United States exports cars to Switzerland and imports cheese from France.This situation suggests

Accepted Answer

The scenario suggests that the United States is better at producing cars than producing cheese, while France is better at producing cheese than producing cars. Therefore, the US has a comparative advantage in the production of cars, and France has a comparative advantage in the production of cheese. This leads to the US exporting cars to Switzerland, where Switzerland has a comparative disadvantage relative to the US in car production, and the US importing cheese from France, where France has a comparative disadvantage relative to the US in cheese production.

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

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

Accepted Answer

Even though Guatemala may have an absolute advantage in producing sugar, if other countries have a comparative advantage in producing sugar, it may not be the most efficient use of resources for Guatemala to produce sugar. Therefore, it is likely that Guatemala would import sugar from other countries where it is produced more efficiently, rather than producing it domestically.

Question 14

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

Accepted Answer

If Taiwan's domestic price is lower than the world price, it indicates that Taiwan can produce soybeans more efficiently than other countries, giving it a comparative advantage, leading to exports.

Question 15

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

Accepted Answer

If the domestic price of tomatoes is higher than the world price, it means that Canada is less efficient in producing tomatoes compared to other countries, which implies that other countries have a comparative advantage over Canada in tomato production. Therefore, it is more likely that Canada will import tomatoes from other countries rather than exporting them.

Question 16

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

Accepted Answer

The domestic price of wheat being higher than the world price of wheat indicates that it is more expensive to produce wheat in the U.S. compared to other countries. This suggests that other countries have a comparative advantage in producing wheat and can produce it at a lower opportunity cost. Therefore, the U.S. will import wheat from these other countries to meet its domestic demand.

Question 17

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Accepted Answer

If the world price of lemons is higher than the price that would prevail in Chile without trade, it means that other countries value Chilean lemons more highly than Chile does itself. Therefore, by exporting lemons, Chile can earn more income than it would by producing other goods for domestic consumption. This indicates that Chile has a comparative advantage in producing lemons. Options A and C are not necessarily true - Chile may import lemons for various reasons, and consumer and producer surplus would depend on the specific conditions of the market.

Question 18

Trade among nations is ultimately based on

Accepted Answer

Trade among nations is based on comparative advantage, which refers to a country's ability to produce a good or service at a lower opportunity cost than other countries. This allows countries to specialize in the production of certain goods or services and then trade those goods or services for other goods or services they need, creating mutual benefits for both countries. Absolute advantage refers to a country's ability to produce a good or service using fewer resources than another country, while strategic advantage and technical advantage do not fully capture the concept of trade based on comparative advantage.

Question 19

Suppose the United States exports cars to Canada and imports bananas from Mexico.This situation suggests

Accepted Answer

The exports of cars to Canada suggest that the United States has a comparative advantage in producing cars compared to Canada. The imports of bananas from Mexico suggest that Mexico has a comparative advantage in producing bananas compared to the United States. Therefore, option A is the best choice. Options B, C, and D are incorrect as they do not reflect the situation described in the question.

Question 20

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

Accepted Answer

The answer of Finland allows trade with the rest of...

Quiz 9: Application: International Trade.