Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concepts of advantage and trade, we can say that the opportunity cost of one pair of gloves is:
A. lower for the United States than Bangladesh, therefore the United States has a comparative advantage in glove production.
B. the same for both the United States and Bangladesh, therefore they both have the comparative advantage in glove production.
C. the same for both the United States and Bangladesh, therefore no comparative advantage exists.
D. higher for the United States than Bangladesh, therefore the United States has a comparative advantage in radish production.
Answer: D
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Figure36-8
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Which of the graphs in Figure 36-8 illustrates the AD–AS shifts associated with a currency depreciation?
A. 1 B. 2 C. 3 D. 4
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a. True b. False Indicate whether the statement is true or false
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