According to international trade theory, a country should:
A. import goods in which it has an absolute advantage.
B. specialize in the production of the good in which it has an absolute disadvantage.
C. export goods when it has either a comparative or absolute disadvantage in producing them.
D. specialize in the production of the good in which they have a comparative advantage.
D. specialize in the production of the good in which they have a comparative advantage.
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GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The percentage change in GDP was
A) 4%. B) 7%. C) 10%. D) 40%.
A consumer's budget line for food (F) and shelter (S) is represented as F = 250 - 5S. If this consumer's income increases by $10 and consumption of shelter remains unchanged, how many more units of shelter can be purchased at most?
A) 10 B) 20 C) 50 D) 2
Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?
What will be an ideal response?
New smartphone applications are developed to help consumers find the cheapest prices in the neighborhood. As a result,
A) firms get greater market power. B) consumers' search costs are greatly lowered. C) firms are able to charge higher prices. D) only smart markets become more competitive.