Answer the following statements true (T) or false (F)
1. According to Adam Smith, mutually beneficial trade requires each nation to be the least-cost producer of at least one good that it can export to its trading partner.
2. If an economy is characterized by increasing opportunity costs, increasing the production of steel by constant amounts results in a constant rate of decrease in the production of autos.
3. If Canada produces computers at a lower relative cost than Germany, Canada is said to have a comparative disadvantage in computers.
4. If Mexico was to realize an increase in its factors of production, its production possibilities frontier would shift inward toward the origin of the diagram.
5. Mercantilism refers to a system of restraints on imports and the promotion of exports, as used by governments in the 1600's and 1700's.
1. True
2. False
3. False
4. False
5. True
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