What is comparative advantage? What is absolute advantage?
What will be an ideal response?
Comparative advantage is the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors. Absolute advantage is the ability of an individual, firm, or country to produce more of a good or service than competitors, using the same amount of resources.
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Whenever the opportunity costs of goods are significantly different in different countries, there are gains from specialization and trade
Indicate whether the statement is true or false
a. True
b. False
The long-run trends of relative prices of primary products suggest that the countries that are dependent on the export of primary products are most likely to
A. slowly catch up with the average per capita income in the industrialized countries. B. experience an increase in their growth rates. C. be able to import more from abroad. D. experience deterioration in their terms of trade.
Refer to the diagram and assume the economy is operating at equilibrium point w. If wages and other resource prices are flexible downward, in the long run a decrease in the price level from P 2 to P 1 would move the economy from point w to point:
A. v.
B. x.
C. t.
D. y.
Refer to the figure below. If Laura and Chris are the only two consumers in this market then at a price of $2.50 per pound, the market demand for hamburger is: 
A. 4.5 pounds per week B. 1.5 pounds per week C. 3 pounds per week D. 4 pounds per week