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You Are the Minister of Trade for a Small Island

Question 96

Multiple Choice

You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: You are negotiating a deal with a neighboring island that has the following annual PPC: Refer to the figure above.As soon as you see the other island's PPC,you realize: A) there will be no trade because the other island has the same comparative advantage as yours. B) there will be no trade because there is no difference in your ability to harvest coconuts. C) there will be no trade because the other island has an absolute advantage. D) your island will have to specialize in coconuts if it wants to gain from trade.
You are negotiating a deal with a neighboring island that has the following annual PPC: You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: You are negotiating a deal with a neighboring island that has the following annual PPC: Refer to the figure above.As soon as you see the other island's PPC,you realize: A) there will be no trade because the other island has the same comparative advantage as yours. B) there will be no trade because there is no difference in your ability to harvest coconuts. C) there will be no trade because the other island has an absolute advantage. D) your island will have to specialize in coconuts if it wants to gain from trade.
Refer to the figure above.As soon as you see the other island's PPC,you realize:


A) there will be no trade because the other island has the same comparative advantage as yours.
B) there will be no trade because there is no difference in your ability to harvest coconuts.
C) there will be no trade because the other island has an absolute advantage.
D) your island will have to specialize in coconuts if it wants to gain from trade.

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