If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade?
A) The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden.
B) Sweden has a higher opportunity cost of producing cell phones than Denmark, and Denmark has a higher opportunity cost of producing butter.
C) Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter.
D) Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter.
C
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In a world with few impediments to capital mobility, the domestic interest rate equals the sum of the foreign interest rate and the expected depreciation of the domestic currency, a situation known as the
A) interest parity condition. B) purchasing power parity condition. C) exchange rate parity condition. D) foreign asset parity condition.
Which of the following is a characteristic of perfect competition?
a. substantial barriers to entry b. homogeneous products c. few sellers d. each firm has significant control over the market
Explain how a market demand curve is constructed.
What will be an ideal response?
The dual banking system in the U.S. today refers to:
A. the ability of banks to be either federally or state chartered. B. a deposit institution's decision to be either a bank or a savings and loan. C. a bank's ability to own another financial institution. D. a bank's ability to issue checking and saving accounts.