The United States can produce both grain and oil more efficiently than Mexico can, but the United States can produce grain more efficiently than oil. Therefore, according to _______ , a basis for trade exists between the two countries.
A) free trade
B) demand
C) supply
D) comparative advantage
Answer: D) comparative advantage
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Profits resulting from luck can be distinguished from profits attributable to shrewd predictions by
A) calculating the opportunity cost of earning the profits. B) comparing the profits with interest rates. C) finding out whether they lead to reduced revenue or increased costs. D) no known empirical test. E) whether or not they were generally anticipated.
A combination of inflation and recession is called:
A. stagflation. B. deflation. C. infusion. D. disinflation.
According to prospect theory, people tend to favor default options. This is known as the:
A. self-serving bias. B. availability heuristic. C. status quo bias. D. framing bias.
After a price floor of $23 is placed on the market in the graph shown:
A. the quantity traded in the market falls. B. some consumers lose because they pay a higher price. C. some producers gain because they sell at a higher price. D. All of these are true.