For both parties to gain from trade, the price at which they negotiate the terms of trade must always be in the middle of the two opportunity costs. Question 5 options: a) True b) False
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For both parties to gain from trade , the price at which they negotiate the terms of trade must always be in the middle of the two opportunity costs.
Question 5 options:
| a) True | |
| b) False |
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- True or False: According to the theory of comparative advantage in international trade, even if one country is less efficient in the production of all goods compared to another country, both countries can still benefit from trade by specializing in the production of the goods in which they have a comparative advantage, leading to overall gains in efficiency and economic welfare.Refer to Table 1-1 Now that the countries have opened trade, would each country agree to a trade of 11 units of cheese (from Derryland to Whetonia) for 3.5 units of bread (from Whetonia to Derryland)? Group of answer choices Both countries would agree to this trade. Derryland would agree, but Whetonia would not. Whetonia would agree, but Derryland would not. Neither country would agree to this trade.Two countries, A and B, that differ in their opportunity costs for the goods each one of them produces have decided to engage in trade. There is A. a unique trading ratio of these two goods that will benefit both countries. B. a unique trading ratio at which Country A will have gains from trade, but Country B will not. C. a range of trading ratios that lies between the opportunity costs of each good for both countries at which both countries will benefit from trade. D. a unique trading ratio at which Country B will have gains from trade, but Country A will not. E. a range of trading ratios that provides gains from trade only to Country A.
- The law of comparative advantage in trade typically applies only to trade between nations and favors the party who has the highest opportunity costs. True or FalseQuestion 3 Trade makes costs Group of answer choices higher and reduces the variety of goods and services available. higher but increases the variety of goods and services available. lower but reduces the variety of goods and services available. lower and increases the variety of goods and services available.Which statement is true? Group of answer choices If one party is more productive in producing both products, it has a comparative advantage in producing both goods None of the listed statements are true A party can have a comparative disadvantage in producing both goods A party has the comparative advantage in producing a good if it has the absolute advantage in producing the other good If parties specialise and trade, it is only the less productive party that can experience any gains from trade
- Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50, while U.S. firms could supply radios at $40 and Mexico at $30. Suppose that Canada initially has a 50 percent tariff on imports of radios and then forms a free trade area with Mexico. As a result, Canada realizes: Group of answer choicesThe gains from trade are evident in economic models, but seldom observed in the real world. evident in the real world, but impossible to capture in economic models. a result of more efficient resource allocation than would be observed in the absence of trade. based on the principle of absolute advantage.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 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure. produce lemons and coffee, each initially (i.e., before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of coffee, as indicated by the grey stars marked with the letter A. Candonia has a comparative advantage in the production of lemons, while Sylvania has a comparative advantage in the production of coffee. Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative…
- Q)Suppose that country A using one unit of labor can produce 80 pounds of apples or 20 pounds of oranges, while country B using the same unit of labor can produce 40 pounds of apples or 15 pounds of oranges. This shows that: Group of answer choices If A and B trade, A should specialize in the production of oranges. B has an absolute advantage in the production of apples. B has a comparative advantage in the production of apples. B has a comparative advantage in the production of oranges.QUESTION 9 Even without 100% specialization, if the trading price is greater than the country’s opportunity cost: There are benefits to trading. Is constant. Is fixed. No trades will take place. All of the above.When two nations trade with each other, complete specialization by both nations will occur ifa) Nations have increasing opportunity costs of production.b) The opportunity cost of producing goods is constant in both nations.c) One nation is large and the other one small.d) Conditions in answers b and c have to be met
