QUESTION 7 According to international trade theory, a country should: O import goods in which it has an absolute advantage O import goods in which it has a comparative advantage O export goods in which it has an absolute advantage import goods in which it has an absolute disadvantage
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- 5. The price of trade Suppose that Croatia and Wales both produce ale and broccoli. Croatia's opportunity cost of producing a bushel of broccoli is 5 kegs of ale while Wales's opportunity cost of producing a bushel of broccoli is 10 kegs of ale. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of ale. has a comparative advantage in the Suppose that Croatia and Wales consider trading broccoli and ale with each other. Croatia can gain from specialization and trade as long as it receives more than of ale for each bushel of broccoli it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of broccoli for each keg of ale it exports to Croatia. Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of ale) would allow both Wales and Croatia to gain from trade? Check all that…1. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Country Dolorium Contente Jeans Rye (Pairs per hour of labor) (Bushels per hour of labor) 20 16 Initially, suppose Contente uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Dolorium uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Dolorium produces 15 million pairs of jeans and 20 million bushels of rye, and Contente produces 8 million pairs of jeans and 48 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.…Economists argue for free trade in import markets because importing goods decreases total surplus. no one is made worse off by importing goods. all consumers and producers benefit from importing goods. O the gains to the U.S. producers outweigh the losses to the U.S. consumers the gains to the U.S. consumers outweigh the losses to the U.S. producers
- Which of the following statements is true? A country that has the absolute advantage in producing a good also has the comparative advantage in producing that good. The country with the higher opportunity cost of producing a good has the comparative advantage in producing that good. O There are mutually beneficial gains from trade if opportunity costs differ. A country can have a comparative advantage in the production of all goods.According to the Infant Industry Argument Poor countries can foster economic development by using tariffs to protect new firms while they learn to become more productive. O Countries that allow children to work have an unfair advantage in international trade. O Costs of young firms are low because their workers lack seniority, and this contributes to comparative advantage. O When technological change creates a new product, it is the innovating country that is likely to be able to export it.If Switzerland can produce chocolate at a lower relative cost than Belgium, what kind of advantage does Switzerland have? O a comparative advantage O an absolute advantage a resource advantage a production advantage
- Question 3 Corn -10 y United States China Which of the following statements about the graph shown here is FALSE? X Rice The United States has the comparative advantage in growing corn. The United States can obtain rice at a lower opportunity cost if it trades corn with Chine than if it tried to grow rice. O Mark this question China has the absolute advantage in growing rice. O If China trades rice for corn with the U.S., it will be the only country to benefit from the trade.Which of the following is proof that international trade is beneficial? O the fact that different regions in the United States specialize in different products O the international trade in exotic products O the sheer volume of trade between very different nationsswer text provided. O the concept of absolute advantage5. The price of trade Suppose that Ireland and Liechtenstein both produce beets and wheat. Ireland's opportunity cost of producing a bushel of wheat is 5 bushels of beets while Liechtenstein's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that Ireland production of wheat and Liechtenstein has a comparative advantage in the production of beets. Suppose that Ireland and Liechtenstein consider trading wheat and beets with each other. Ireland can gain from specialization and trade as long as it receives more than of beets for each bushel of wheat it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as of wheat for each bushel of beets it exports to Ireland. long as it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Liechtenstein and Ireland to…
- Suppose that Poland and Wales both produce ale and glass. Poland's opportunity cost of producing a pane of glass is 4 kegs of ale while Wales's opportunity cost of producing a pane of glass is 12 kegs of ale. By comparing the opportunity cost of producing glass in the two countries, you can tell thatWales has a comparative advantage in the production of glass andPoland has a comparative advantage in the production of ale. Suppose that Poland and Wales consider trading glass and ale with each other. Poland can gain from specialization and trade as long as it receives more than of ale for each pane of glass it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of glass for each keg of ale it exports to Poland. Based on your answer to the last question, which of the following prices of trade (that is, price of glass in terms of ale) would allow both Wales and Poland to gain from trade? Check all that apply. 8 kegs of…Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? Select one: O a. Traditional land line phones become more expensive. O b. Cellular phones become more popular. O. A technological advance makes cellular phone production less expensive. O d. The components used to produce cellular phones become more expensive.Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. Germany France Wine (Bottles) Cheese (Pounds) 0 1 2 3 4 8 6 4 2 0 Wine (Bottles) 0 1 2 3 4 5 Cheese (Pounds) 20 16 12 8 4 0 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? O A. Germany has a comparative advantage producing wine and cheese. OB. Neither has a comparative advantage producing wine or cheese. O C. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. France has a comparative advantage producing wine and cheese. O D. O E. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. Suppose that France is currently producing 1 bottle of wine and 6 pounds of cheese and Germany is currently producing 3 bottles of wine and 8 pounds of cheese. Then, assume instead that…