The United States has a comparative advantage in the production of wheat, and Haiti has a comparative advantage in the production of sugar. If both countries specialize based on the theory of comparative advantage
A. only the production of wheat will increase.
B. only the consumption of both goods will increase.
C. the production and consumption of both goods will increase.
D. only the production of both goods will increase.
Answer: C
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Whether exchange is between individuals, firms, or countries, voluntary trade occurs because:
a. only one party is made better off. b. both parties are made better off. c. financial agents devote resources to arranging such trades. d. these trades create employment for the economy. e. of mandates from the government.
A street light is
a. rival and exclusive, and therefore is a public good b. nonrival, but since it is exclusive, it is a private good c. exclusive, but since it is nonrival, it is a public good d. nonrival and nonexclusive, and therefore is a public good e. nonrival and nonexclusive, and therefore is a private good
When a firm has decreasing average costs over the entire range of market demand it is:
A. a natural monopoly. B. an oligopoly. C. rent seeking. D. in a contestable market.
Assume that production of a good imposes external costs on others. The equilibrium price will be ____ and the equilibrium quantity ____ for efficient resource allocation
a. too high; too high. b. too high; too low. c. too low; too high. d. too low, too low.