If one country has the ability to produce all goods and services more efficiently than any other country, then:
A) there is no benefit to be derived from trading.
B) there is still benefit to trading because the advantages to trade depend on comparative advantage and not on an absolute ability to produce more efficiently.
C) it should not trade but should isolate itself from the less productive rest of the world.
D) it must be a very large country.
Ans: B) there is still benefit to trading because the advantages to trade depend on comparative advantage and not on an absolute ability to produce more efficiently.
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According to the Application, economist John B. Taylor found that the temporary tax cuts which were a part of the 2009 stimulus package
A) were primarily used to pay off home mortgage balances. B) were split very evenly between consumption spending and household saving. C) were very successful in stimulating consumption spending. D) did very little to stimulate consumption spending.
In Samoa the opportunity cost of producing 1 coconut is 4 pineapples, while in Guam the opportunity cost of producing 1 coconut is 5 pineapples. In this situation: a. if trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. b. Guam will be better off if it exports coconuts and imports pineapples
c. both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples. d. mutually beneficial trade cannot occur.
Which is a major criticism of a monopoly as a source of allocative inefficiency?
A. A monopolist will always make profits and that means that prices are too high. B. A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms in other industries. C. A monopolist has no incentive to produce efficiently because even the inefficient monopolist can be assured of economic profits. D. A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to the monopolist's opportunity cost.
If the marginal cost were $16, output would be
A. 1.
B. 2.
C. 3.
D. 4.