Answer the following statements true (T) or false (F)
1. One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.
2. If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.
3. In a two-nation two-good world, it is possible for one nation to have the comparative advantage in both goods.
4. If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.
5. In a two-nation two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.
1. T
2. F
3. F
4. T
5. F
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