Question

11. Because the price of an exported good​ ________, then​ ________ gain from exports.

A. Falls; domestic producers

B. rises; domestic consumers

C. falls; domestic consumers

12. When the principle of comparative advantage is used to guide​ trade, then a country will specialize by producing only

A.goods with the highest opportunity cost.

B.goods for which production takes fewer worker−hour than another country.

C.goods for which production costs are more than average total costs.

D.goods with the lowest opportunity costs.

Answer 1

11. Option A.

• Exports refers to sale of goods produced domestically in a country to a foreign market.
• During exports the domestic consumer's loose and the domestic producers gain.
• That is increased exports allow domestic producers to produce low cost and differentiated products.

12. Option D.

• When the principle of comparative advantage is used to guide trade a country will specialize by producing only goods with the lowest opportunity cost.
• Countries usually benefit from producing those goods and services from which it can gain comparative advantage.
• During international trade the countries must produce goods with lowest opportunity cots for which it have comparative advantage.
• And must sell those goods with highest opportunity cost for which it has a competitive advantage.