Question 1

In country A, the opportunity cost of 50 flash drives is 100 e-books. In country B, the opportunity cost of 50 flash drives is 40 e-books. Country A has a comparative advantage in flash drive production.

Accepted Answer

Comparative advantage refers to the ability of a country to produce goods or services at a lower opportunity cost compared to another country. The lower opportunity cost means that a country can produce a good or service with fewer resources or sacrifice less in terms of producing an alternative good or service.

In this case, the opportunity cost of 50 flash drives is higher in country A (100 e-books) compared to country B (40 e-books). This implies that country B can produce 50 flash drives at a lower opportunity cost, hence it has a comparative advantage in flash drive production.

Question 2

The possession of redistribution advantage in the production of two different items by residents of two countries suggests that specialization and international trade can boost the two nations' combined total output.

Accepted Answer

The answer of The possession of redistribution advantage in the...

Question 3

After residents of two nations specialize in producing different items and engage in international trade, each country's economy's consumption possibilities are typically located at points outside their production possibilities frontiers.

Accepted Answer

This is true because specialization and trade allow countries to produce more efficiently and effectively, leading to increased productivity and consumption possibilities beyond their own production possibilities frontiers.

Question 4

If a nation has an absolute advantage in producing a good:

Accepted Answer

Having an absolute advantage means that the nation can produce the good more efficiently than another nation. However, comparative advantage takes into account the opportunity cost of producing a good. Therefore, it is possible for a nation to have an absolute advantage in producing a good but still have a comparative disadvantage if producing that good comes at a higher opportunity cost compared to another good. Depending on the opportunity cost and comparative advantage of producing the good, the nation may decide to export or import the good.

Quiz 2: Comparative Advantage: How Nations Can Gain From International Trade

In country A, the opportunity cost of 50 flash drives is 100 e-books. In country B, the opportunity cost of 50 flash drives is 40 e-books. Country A has a comparative advantage in flash drive production.

The possession of redistribution advantage in the production of two different items by residents of two countries suggests that specialization and international trade can boost the two nations' combined total output.

After residents of two nations specialize in producing different items and engage in international trade, each country's economy's consumption possibilities are typically located at points outside their production possibilities frontiers.

If a nation has an absolute advantage in producing a good: