If country A can produce more of practically everything than can country B, then which of the following statements is true?
A. Country A has no incentive to trade with country B.
B. Trade can benefit both countries.
C. Country B cannot have a comparative advantage in the production of any good that country A wants to buy.
D. Country B has no incentive to trade with country A.
Answer: B
You might also like to view...
According to the economy's self-correcting mechanism, how does the economy return to potential output following a negative demand shock? How is the recovery process different, if the government implements a policy of economic stimulus?
What will be an ideal response?
Distorting taxes can invalidate Ricardian equivalence because
A) they confuse consumers about the need for government to repay its debt. B) alternative ways of collecting the same tax revenue produce different amounts of lost welfare. C) they are inferior to lump-sum taxes. D) they are more popular, politically, than lump-sum taxes.
It's logical, it's a rule of thumb, it's an economic guideline: By producing at a quantity where MR = MC,
a. profit is guaranteed b. profit becomes zero c. the firm incurs a loss d. profit is maximized (or loss minimized) e. the firm should increase quantity
For the United States since 1950, imports as a percentage of GDP has
A. decreased. B. tripled. C. increased slightly. D. remained constant.