Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. After examining each country's production possibilities curve, it is clear that:
A. both countries can benefit from trade because absolute advantage exists.
B. only Country A will benefit from trade.
C. both countries could benefit from trade because comparative advantage exists.
D. neither country will benefit from trade.
Answer: C
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The process of combining many different debt instruments like home mortgages into a pool of hundreds of thousands of individual contracts and then selling new financial instruments is called
A) Securitization. B) Leveraging. C) Sub-priming. D) NINJA loaning.
Free trade is viewed as key to economic development because
A) it encourages a faster spread of technology. B) it encourages a country's exports only. C) it brings in expensive new technology. D) none of the above is correct.
Which of the following terms describes a financial instrument which pools the deposits of many investors together and invest them in a safe way like short-term government bonds?
a. Money market funds b. Savings deposits c. Time deposits d. Certificates of deposit
Which of the following arguments are frequently used to justify laissez-faire policy?
a. b, c, and e b. Many concentrated markets are contestable. c. There is competition, even in the most concentrated markets. d. Monopolies are inevitable. e. Economic blocs keep prices down.