Which of the following statements correctly describes international trade in accordance with comparative advantage?
a. Trade is impossible unless there exists a purely competitive market for foreign exchange.
b. Trade makes all the citizens of the trading countries better off, which is a clear example of a Pareto improvement.
c. Trade may well make some citizens in each trading country worse off.
d. Trade requires the judicious application by government of tariffs and quotas in order to discourage production according to comparative disadvantage.
e. Trade requires that the economies of the trading partners be of roughly equal size (United States versus Andorra just does not work).
C
You might also like to view...
All of the following are aspects of microeconomics EXCEPT
A) monopolies. B) a firm maximizing profit. C) a worker choosing one job over another. D) the average level of prices of all goods and services produced in a country in a year.
If a firm doubles its resources and generates an output level which is more than double, it is said to be experiencing:
a. economic fluctuations. b. recession. c. diseconomies of scale. d. increasing marginal returns to a factor. e. economies of scale.
Which of the following is true? a. Poverty, defined as the lack of a minimum level of consumption, could be potentially eliminated, but scarcity could not. b. Scarcity could be potentially eliminated but poverty could not
c. Both scarcity and poverty could be potentially eliminated. d. Neither scarcity nor poverty could be potentially eliminated.
The United States is a member of the fast-growth club of economic convergence, and India is a member of the slow-growth club of economic convergence.
Select whether the statement is true or false. A. True B. False