Question

Which of the following is true? a) If one country has an absolute disadvantage in one...

Which of the following is true?

a) If one country has an absolute disadvantage in one commodity, it must also have a comparative disadvantage in that commodity.

b) If one country has a comparative advantage in one commodity, it must also have an absolute advantage in that commodity.

c) If one country has absolute advantages in producing all commodities, it must specialize in and export all the commodities.

d) Each country can gain from specializing in and exporting the commodity with comparative advantage even if it has an absolute disadvantage in that commodity.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option d

d) Each country can gain from specializing in and exporting the commodity with comparative advantage even if it has an absolute disadvantage in that commodity

A country gain from trade if it trades the good in which has a comparative advantage because a comparative advantage depends on the opportunity cost of the production so the country can trade at least the opportunity cost of that good. It leads to more consmption than the PPF of the country so the economic welfare of all increases.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If a country has a comparative advantage in the production of a good, then that country...
If a country has a comparative advantage in the production of a good, then that country A)also has an absolute advantage in producing that good. B)should allow another country to specialize in the production of that good. C)has a lower opportunity cost in the production of that good. D)all of the above
1. If one person/firm/country has: a. An absolute advantage in the production of a good, do...
1. If one person/firm/country has: a. An absolute advantage in the production of a good, do they automatically also have a comparative advantage in the production of that good as well? Why? b. An absolute advantage in the production of all good is it worth it for them to trade with others? why? 2. Is absolute advantage a requirement for comparative advantage? Why?
Suppose there are two countries producing just two goods, soybeans and potash fertilizer. Each country has...
Suppose there are two countries producing just two goods, soybeans and potash fertilizer. Each country has the same amount of inputs (factor resources and technology). An analysis of the level of output for each product if each country was to fully specialize in producing only one good is shown below. (the data shows how much output could be produced through specialization by each country: example: for soybeans country A can produce 40 units soybeans specializing and zero potash and B...
True or False? 1) If Country A is absolutely better at producing everything than Country B,...
True or False? 1) If Country A is absolutely better at producing everything than Country B, then there is no incentive for Country A to engage in trade with Country B. 2) If Tom has a comparative advantage in producing corn then he must also have an absolute advantage in producing corn. 3) If Joe can produce a good at a lower opportunity cost than Fred, then Joe must have an absolute advantage in producing this good. 4) Consider the...
If a country has a comparative advantage in producing rice and a comparative disadvantage in producing...
If a country has a comparative advantage in producing rice and a comparative disadvantage in producing pencils, does the Ricardian model predict that the wage in rice production will be lower than the wage in pencil production as a result of international trade?
The following table shows the amount of textile and auto one unit of labor can produce...
The following table shows the amount of textile and auto one unit of labor can produce in Mexico and the United States. Textile Auto Mexico 12 2 United States 16 4 In Mexico, what are the marginal products of labor in textile and auto production, respectively? In the United States, what are the marginal products of labor in textile and auto production, respectively? Which country has an absolute advantage in textile and which country has an absolute advantage in auto?...
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce at...
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce at most 40 scones per day or at most 2 sweaters per day. Suppose that a Scottish worker can produce at most 20 scones per day or at most 4 sweaters per day. a. Which country has the absolute advantage in the production of each good? b. Find the opportunity cost of producing one sweater in terms of scones for each country. In other words,...
QUESTION 27 Which of the following transactions will be recorded on Guatemala’s capital account? People living...
QUESTION 27 Which of the following transactions will be recorded on Guatemala’s capital account? People living in Guatemala City purchase $1,000,000 worth of household furniture from Mexico. People living in Guatemala City sell $1,000,000 worth of coffee to people living in Mexico City. Americans buy $1,000,000 worth of coffee from people living in Guatemala. People living in Guatemala City buy, on the New York Stock Exchange, $1,000,000 worth of shares in Microsoft, Inc. none of the above 1 points   ...
1) If Country A is absolutely better at producing everything than Country B, then there is...
1) If Country A is absolutely better at producing everything than Country B, then there is no incentive for Country A to engage in trade with Country B ( True or False?) 2)In one day Sam can produce 40 salads or 32 sandwiches. What is the opportunity cost of producing 1 sandwich?   3)If Tom has a comparative advantage in producing corn then he must also have an absolute advantage in producing corn (T/F?) 5) In one hour John can produce...
The United States and France both enjoy wine and pasta and currently each country produces both...
The United States and France both enjoy wine and pasta and currently each country produces both goods. France can produce 10,000 pounds of pasta or 15,000 bottles of wine per month. The U.S. can produce 24,000 pounds of pasta or 18,000 bottles of wine per month. a. Does either country have an absolute advantage at producing wine or pasta? b. Calculate the comparative advantage for both countries for pasta and wine. c. Explain who should specialize in producing wine and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT