Question 1

If a country has an absolute advantage in producing a product, it must also have a comparative advantage in producing that product.

Accepted Answer

While a country that has an absolute advantage in producing a product may also have a comparative advantage in producing that product, it is not necessarily always the case. Comparative advantage takes into account the opportunity cost of producing one product over another, while absolute advantage simply measures the ability to produce a product more efficiently than other countries. Therefore, it is possible for one country to have an absolute advantage in producing a certain product, but another country may still have a lower opportunity cost and therefore a comparative advantage in producing that product.

Question 2

A situation in which a country does not trade with other countries is called

Accepted Answer

Autarky refers to a country's economic system in which it does not engage in international trade and is completely self-sufficient in all aspects of economic production and consumption.

Question 3

The first example used to explain comparative advantage used two countries (England and Portugal) and two goods (wine and cloth) to show that

Accepted Answer

The answer of The first example used to explain comparative...

Question 4

Tastes for products such as beer differ. As a result

Accepted Answer

Because tastes for beer differ, different countries may each have a comparative advantage in producing different types of beer. This can lead to specialization and the production of unique and high-quality beers in different regions of the world.

Question 5

What does it mean for a country to have an absolute advantage in producing a product?

Accepted Answer

The answer of What does it mean for a country...

Question 6

-Refer to Table 13-4. Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.

Accepted Answer

The answer of 
-Refer to Table 13-4. Fill in the...

Question 7

Examples of ________ show how trade between two countries can make each better off.

Accepted Answer

Comparative advantage is the concept that shows how trade between two countries can benefit both by allowing each country to specialize in producing the goods or services that they are relatively more efficient at producing. This leads to increased production, lower costs, and ultimately greater economic welfare for both countries. The other answer choices (A, C, and D) do not directly address the benefits of trade between two countries.

Question 8

A consequence of increasing marginal costs of producing digital music players in Japan is

Accepted Answer

Increasing marginal costs mean that it becomes more expensive to produce each additional unit of digital music players. This will make it less profitable for Japanese producers to specialize solely in this product. Instead, they may choose to produce a combination of digital music players and other products with lower marginal costs. This is known as partial specialization and is represented by B. The other options are not as likely because Japan is a major exporter of digital music players and restricting imports of them would not be in its best interest.

Question 9

Which of the following statements is true?

Accepted Answer

According to the principle of comparative advantage, each country as a whole will benefit from international trade. However, some individuals within each country may be negatively affected if they lose their jobs or face competition from foreign imports. Therefore, option D is the correct statement.

Question 10

If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway.

Accepted Answer

Even if Estonia has an absolute advantage in the production of two goods compared to Norway, both countries can benefit from trade if they specialize in producing the good or service where they have a comparative advantage and then trade for other goods or services. This allows them to increase overall production and consumption.

Question 11

-Refer to Table 13-5.
a. Which person has an absolute advantage in the production of bows? arrows?
b. Which person has a comparative advantage in the production of bows?
c. Which person has a comparative advantage in the production of arrows?

Accepted Answer

The answer of 
-Refer to Table 13-5.
a. Which person has...

Question 12

If a country has a comparative advantage in producing a product, it may not have an absolute advantage in producing that product.

Accepted Answer

The concept of comparative advantage suggests that a country should specialize in producing the goods that it can produce more efficiently than other countries, even if it doesn't have an overall advantage in producing that good. In contrast, absolute advantage means the country can produce a good more efficiently than any other country. Therefore, a country can have a comparative advantage in producing a product without having an absolute advantage.

Question 13

The ratio at which a country can trade its exports for imports from other countries is called

Accepted Answer

The terms of trade refer to the ratio at which a country can trade its exports for imports from other countries.

Question 14

Countries that engage in trade will tend to specialise in the production of goods and services in which they have ________ and will ________ these goods and services.

Accepted Answer

According to the principle of comparative advantage, countries specialize in producing goods and services in which they have a lower opportunity cost compared to other countries. This allows them to produce more efficiently and at lower costs, which leads to higher output and increased trade. As a result, countries with a comparative advantage in certain goods and services will export these products, while importing goods that can be produced more efficiently by other countries. Therefore, option C is the correct answer.

Question 15

In the real world we don't observe countries completely specialising in the production of goods for which they have a comparative advantage. One reasons for this is

Accepted Answer

The production of most goods involves increasing opportunity costs, which means that as a country produces more of a good, it must give up increasing amounts of other goods. This makes it difficult for countries to completely specialise in the production of goods for which they have a comparative advantage, as they may not be willing to sacrifice the production of other important goods.

Question 16

-Refer to Table 13-4.
a. Which country has an absolute advantage in the production of handbags and jackets?
b. Which country has a comparative advantage in the production of handbags?
c. Which country has a comparative advantage in the production of jackets?

Accepted Answer

The answer of 
-Refer to Table 13-4.
a. Which country has...

Question 17

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Accepted Answer

The answer of Explain whether it is possible for a...

Question 18

If the opportunity cost of production for two goods is different between two countries, then

Accepted Answer

If the opportunity cost of production for two goods is different between two countries, then it means that one country may have a comparative advantage in producing one good while the other country may have a comparative advantage in producing the other good. This creates the potential for mutually beneficial trade where each country can specialize in producing the good where it has a comparative advantage and then trade with the other country. This can lead to both countries being better off.

Question 19

-Refer to Table 13-5. Fill in the following table with the opportunity costs of producing bows and arrows for Ahmet and MyLinh.

Accepted Answer

The answer of 
-Refer to Table 13-5. Fill in the...

Question 20

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Accepted Answer

The answer of The ability of a firm or country...

Quiz 13: International Trade