Answer the following statements true (T) or false (F)
1.According to the principle of comparative advantage, an open trading system results in resources being channeled from uses of low productivity to those of high productivity.
2.With increasing opportunity costs, comparative advantage depends on a nation's supply conditions and demand conditions; with constant opportunity costs, comparative advantage depends only on demand conditions.
3.The existence of exit barriers tends to delay the closing of inefficient firms that face international competitive disadvantages.
4.MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.
5.The MacDougall study of comparative advantage hypothesized that in those industries in which U.S. labor productivity was relatively high, U.S. exports to the world should be lower than U.K. exports to the world, after adjusting for wage differentials.
1.True
2.False
3.True
4.True
5.False
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