Question

1.Clothes are produced using cotton and leather. In Ghana, a clothing can be produced with 3 cottons and 3 leathers. In Nigeria, a clothing can be produced with 3 cottons and 2 leathers. Which of the following is TRUE?

Clothes are produced using cotton and leather. In Ghana, a clothing can be produced with 3 cottons and 3 leathers. In Nigeria, a clothing can be produced with 3 cottons and 2 leathers. Which of the following is TRUE? *

1 point

A) Nigeria has both a comparative and an absolute advantage in the production of clothes

B) Ghana has both a comparative and an absolute advantage in the production of clothes

C) Ghana has an absolute advantage in the production of clothes, but from this information it cannot be determined if Ghana has a comparative advantage in the production of clothes

D) Nigeria has an absolute advantage in the production of clothes, but from this information it cannot be determined if Nigeria has a comparative advantage in the production of clothes

2.Suppose that Argentina and Chile are both engaged in the production of copper and wheat, and that Argentina has an absolute advantage in the production of both goods. If Chile has a lower opportunity cost for producing copper, then *

1 point

A) Chile has a comparative advantage in the production of copper, and specialization and trade between the two countries can be mutually beneficial

B) Argentina still has a comparative advantage in the production of both goods

C) Chile has a comparative advantage in wheat production and trade can benefit both countries

D) Chile has a comparative advantage in the production of copper, but it is outweighed by Argentina's absolute advantage in wheat production and thus trade is not beneficial to

Chile.

3.Country A would have an absolute advantage over Country B in the production of corn, if *

1 point

A) corn sells for a higher price in Country A than in Country B

For a given amount of resources, Japan can produce 2000 motorbikes and 4000 bicycles. For the same given amount of resources, UK can produce 500 motorbikes and 2000 bicycles. Which statement is correct? *

1 point

A) Japan has an absolute advantage in bicycles and UK has an absolute advantage in motorbikes

B) UK has an absolute advantage in both motorbike and bicycles

C) Japan has an absolute advantage in both motorbikes and bicycles

D) Japan has no absolute advantage in either product.

When countries specialize in producing those goods in which they have a comparative advantage, they *

1 point

A) maximize their combined output and allocate their resources more efficiently

B) allocate their resources more efficiently, but they do not necessarily maximize their combined output

C) maximize their combined output, but they do not necessarily allocate their resources more efficiently

D) do not necessarily maximize their combined output, and they also do not necessarily allocate their resources more efficiently.

B) corn can be produced at lower costs in terms of other goods than it could be in Country B

C) Country A uses fewer resources to produce corn than Country B does

D) the demand for corn is higher in Country A than in Country B

Answer 1

1) Nigeria can produce using less leather than Ghana,then it has absolute advantage in production of clothes.

Option D is correct

2) Chile has comparitive advantage in copper as it can produce at lower opportunity cost than Argentina. So Argentina will have comparitive advantage in wheat .so specializing in their respective good and trading will benefit both country.

OPTION A is correct

3)A country has absolute advantage,when Country A uses fewer resources to produce corn than Country B does

4) because Japan can produce both good amount higher than UK with same resources ,so it has absolute advantage in both goods.

5)maximize their combined output and allocate resource more efficiently.