Answer the following questions true (T) or false (F)
1. If a country has a comparative advantage in producing a product, it may or may not have an absolute advantage in producing that product.
2. If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway.
3. The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called comparative advantage.
1. TRUE
2. FALSE
3. TRUE
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The marginal cost curve
A) shows the maximum price that a producer must receive to induce it to produce a unit of a good or service. B) shows the minimum price sellers must receive to produce a unit of a good or service. C) is the same as the demand curve. D) shows what buyers are willing to give up to get one more unit of a good or service.
You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:
A. Mary has an absolute advantage in gardening. B. Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog. C. Joe has a comparative advantage in walking the dog. D. Mary's opportunity cost of walking the dog is lower than Joe's.
Which of the following statements is true about falling birthrates?
A. They tend to lag behind falling death rates, allowing population growth to continue for at least one or two more generations. B. They tend to precede declines in death rates, causing a temporary dip in population before it stabilizes in a generation or two. C. They tend to lag behind declining standards of living. D. They always cause population to decline.
All decisions involve opportunity cost.
Answer the following statement true (T) or false (F)