Refer to the graph shown.
We can conclude from the diagram that:
A. Norstrilia has a comparative advantage in both goods.
B. Norstrilia has a comparative advantage in manufacturing and Graustark has a comparative advantage in agriculture.
C. Norstrilia has a comparative advantage in agriculture and Graustark has a comparative advantage in manufacturing.
D. Graustark has a comparative advantage in both goods.
Answer: B
You might also like to view...
The stockholders of a corporation have ________ liability and ________ required to pay all of the firm's losses
A) limited; are B) limited; are not C) unlimited; are D) unlimited; are not
Which of the following is one common criticism of capitalism?
a. Poor product quality and little product diversity. b. Inefficiency of nationalized industries. c. Inability to adjust quickly to changing economic conditions. d. Inadequate environmental protection.
If foreigners decide to increase their investments in the U.S., this will cause
a. an appreciation of the dollar and foreign goods to become cheaper b. a depreciation of the dollar and U.S. goods to become cheaper c. a favorable balance of trade and an appreciation of the dollar d. a devaluation of the dollar and a favorable balance of trade e. a surplus in the current account
Which of the following theories predicts that a country will export those goods that use the country's abundant factor(s) intensively and import those goods that use the country's scarce factor(s) intensively?
A. The theory of purchasing power parity B. The theory of absolute advantage C. The theory of comparative advantage D. The Heckscher-Ohlin theory