To say that countries gain from trade means that: a) if one country has an absolute advantage over another in producing all goods, then that country alone benefits. b) trade is a zero-sum game. c) small countries always gain more than large countries in international trade. d) countries can consume beyond their production possibility frontiers (PPF).

To say that countries gain from trade means that: a) if one country has an absolute advantage over another in producing all goods, then that country alone benefits. b) trade is a zero-sum game. c) small countries always gain more than large countries in international trade. d) countries can consume beyond their production possibility frontiers (PPF).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: How are a nation’s production possibilities affected by specialization and trade based on the law of…

A: Law of comparative advantage means a country should produce and export the good in which the…

Q: The concept of comparative advantage in international trade suggests that:A) Each country should…

A: The concept of comparative advantage in international trade suggests that: D) Each country should…

Q: Which of the following statements is NOT true? Group of answer choices In a two-good market, a…

A: If the domestic price of a good is less than the world price of the good then a nation is going to…

Q: when a country has a comparative advantage in the production of a good, it means that it can produce…

A: If both countries have an absolute advantage, then also trade takes place due to the comparative…

Q: Assume that Derryland and Whetonia can switch between producing cheese and producing bread at a…

A: A country should specialise in a particular good in which it has a competitive advantage.

Q: The PPFs below shows how many airplanes and pizzas Country A and Country B can produce with a…

A: Comparative advantage refers to a country has advantage in producing a product relative to another…

Q: Which of the following statements is not correct? Trade allows for specialization.…

A: For trade to be occur minimum two parties are required.

Q: 32 28 Consumption After Trade 24 PPF 20 16 12 8 4 8 12 16 20 24 28 32 POTATOES (Millions of pounds)…

A: Freedonia has a comparative advantage in the production of tea while Sylvania has the comparative…

Q: Consider a hypothetical world with two countries: Country A and Country B. Each country has 45…

A: The objective of the question is to determine which good Country A will specialize in based on the…

Q: Country A can produce one Outfit in 6 hours and one unit of Corn in 2 hour. Country B can produce…

A: The ability of an economy to produce a specific good or service at a lower opportunity cost than its…

Q: Suppose that Glacier and Denali agree to trade. Each country focuses its resources on producing only…

A: Opportunity cost is the cost of producing one good in terms of other. Opportunity cost shows the…

Q: List any three non-economic rationale of intervention of trade ? Which non-economic rationale will…

A: a. Maintenance of fundamental ventures (particularly safeguard): A significant thought behind…

Q: For a producer to have a comparative advantage in a good is it necessary to be the most efficient…

A: Comparative Advantage: In the trade theory the country which has comparative a advantage in…

Q: If Argentina has an absolute advantage in the production of wheat and Chile has an absolute…

A: Introduction The theory of absolute advantage has given by Adam smith. According to Adam smith, If a…

Q: a) Which country has an absolute advantage in bananas? In wheat? b) What is the relative price of…

A: Absolute advantage: When a country or a person can produce more of a good or service in less time…

Q: The diagram below shows supply and demand curves for the same good in two countries, A and B. Based…

A: Explanation: Соuntry А is exроrting beсаuse dоmestiс рriсe is less thаn the wоrld рriсe.…

Q: When a country has a comparative advantage in the production of a good, it means that it can produce…

A: Let us first calculate the opportunity cost (OC) in the production of both goods for both countries…

Q: In an international market, we say that a country will be an (Blank) of a good if it has the (Blank)…

A: International trade refers to the process of exchange of goods, services, and capital across the…

Q: Assume that under free trade the U.S. can import good x from France for $50 and domestic consumption…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: coffee , while Lamponia has a comparative advantage in the Candonia has a comparative advantage in…

A: The PPF is also referred to as the production possibility curve (PPC). It is a key economic concept…

Q: Suppose an economist develops an international trade model based on the assumption that there are…

A: The Economist mostly considered only two countries and two goods for the better understanding of the…

Q: We are supposed to create a PPF with manufactured goods on the y axis and agricultural goods on the…

A: The production possibility frontier of an economy is a model that illustrates the total output that…

Q: Trade can happen at pre trade prices. True/False. Explain your answer theoretically and graphically.…

A: International trade refers to the exchange of products, services, and capital across worldwide…

Q: Freedonia Lamponia 16 16 14 14 12 12 PPF 10 10 8 8 PPF 4 2 2 + 4 8 10 12 14 16 2 4 8 10 12 14 16…

A: Comparative Advantage of a nation in producing certain goods is said to be the relative ability of…

Q: According to the theory of comparative advantage, countries gain from trade because Group of answer…

A: Comparative Advantage refers to the ability of a nation to produce a particular good or a service in…

Q: The law of comparative advantage in trade typically applies only to trade between nations and favors…

A: Comparative advantage is when one party can produce goods with lower opportunity cost. Now this…

Q: sugar Candonia has a comparative advantage in the production of while Lamponia has a comparative…

A: A production possibility curve depicts the combination of two goods that can be produced by using…

Q: n the PPC, if the point is found within the PPC curve, this means that the combination of goods…

A: A PPC (Production Possibility Curve) is a graphical representation of various combinations of goods…

Q: The United States has a comparative advantage in the production of wheat, and Haiti has a…

A: Comparative advantage refers to the situation when both the trading countries or firms has relative…

Question

To say that countries gain from trade means that:
a)
if one country has an absolute advantage over another in producing all goods, then
that country alone benefits.
b) trade is a zero-sum game.
c) small countries always gain more than large countries in international trade.
d) countries can consume beyond their production possibility frontiers (PPF).

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Understand the Concept of Gains from Trade

VIEW

Step 2: Examine the Absolute Advantage Theory

VIEW

Step 3: Debunk the Zero-Sum Game Myth

VIEW

Step 4: Analyze the Relationship between Country Size and Gains

VIEW

Step 5: Recognize the Link between Trade and Production Possibility Frontiers (PPF)

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A small country’s demand curve is given by Q=36-2P and its supply curve is given by Q=4P-12. Assume the world is currently in free trade and that the price under free trade is $4. What is the prohibitive specific import tariff for this economy (i.e. the tariff that would reduce net exports to zero)?Group of answer choices a.6 b.5 c.4 d.8
The demand for cameras in a certain country is given by D=8000−30P, where P is the price of a camera. Supply by domestic camera producers is S=4000+10P. Suppose that world price of a camera is $150. If this country decides to trade, which of the following is true? Group of answer choices 3000 cameras will be exported Domestic production of cameras will decrease by 500 Domestic production of cameras will increase by 500 2000 cameras will be imported
A person or nation that has a comparative advantage in the production of a good, should A) Specialize in the production of that good B) Have the highest opportunity cost C) Not specialize in the production of that good D)Automatically has an absolute advantage
The United States and Canada have the production possibilities curves shown above. It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 3 Corn? Why or why not? Show your work.
A small island nation of Gondwana can produce either 40 Apple iPhones (Apple for short) or 80 Samsung Galaxy phones (Samsung for short) every hour. A small island nation of Pandea can produce 75 Apple or 100 Samsung phones every hour. Without trade, each island nation consumes everything it produces. Assume that labor is the only resource they need on each island. If they decide to trade, transportation cost is zero. After 10 hours of work right now, Gondwana produces 200 Apple and 400 Samsung phones, Pandea produces 375 Apple and 500 Samsung phones. (a) Who if any has a comparative advantage in Apple iPhones? Who if any has a comparative advantage in Samsung Galaxy phones? (b) Is it possible for both Gondwana and Pandea to improve their consumption levels in one or both products, without decreasing consumption in any of the products? If no, explain why; if yes, give an example of production schedule and trade flows that would be mutually beneficial. (c) Give a range of prices of…
During the last 20 to 30 years, there have been a number of countries whose economies have experienced important economic expansion and development. One group of countries has been labeled the BRIC countries and the other the VISTA countries. Identify each of the nine countries and provide some insights about their economies and economic importance. The theories of absolute and comparative advantage have been offered as an economic rationale for trade between and among regions and countries. Compare and contrast the two concepts. Which of the two do you think is more important for explaining the growth in global trade during the last 25 years? Why”
(e) Assume that Home and Foreign open to trade with each other. Explain how is the pattern of trade (which good will each country export and import) determined
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Candonia and Sylvania. Both countries produce lemons and coffee, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of coffee, as indicated by the grey stars marked with the letter A. Candonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of lemons and million pounds of coffee. Suppose that Candonia and…
Consider the PPF of a country with movies on the horizontal axis and computers on the vertical axis. Show the effects of each of the following: War results in a loss of life for one in eight prime-age males
(g) Explain how is the production structure (i.e. which goods are produced) affected in each country by opening up to trade. Is this consistent with the empirical evidence we observe in reality? How can this model be modified to produce a less stark result?
Country X has 100 units of labour and country Y has 200 units of labour. Both countries produce computers and televisions. The unit labour requirements are given in the table below: Computers Televisions Country X 50 Country Y 100 Assume that free trade exists and that the relative price is such that both countries specialize completely in the industry in which they have a comparative advantage (neither country produces both goods). The supply of computers relative to televisions will be Select one: a. 0.02 (or 1/50) O b. 0.013 (or 1/75) c. 0.01 (or 1/100) d. impossible to determine without knowing the relative price of computers in terms of televisions
Many trading partners trade the same goods and services with one another. The U.S. exports automobiles to Europe and Europe exports automobiles to the United States. In fact, that's true for food, appliances, computers and many other goods. Does intra-industry trade contradict the theory of comparative advantage? Why or why not?