Principles of Microeconomics California Edition 2nd Edition
2nd Edition
ISBN: 9780393622089
Author: Dirk Mateer, Lee Coppock
Publisher: W. W. Norton
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Question
Chapter 19, Problem 6SP
(a):
To determine
Trade helps to specialize based on
(b):
To determine
Trade helps to consume variety of products.
(c):
To determine
Trade increases the competition in the market.
(d):
To determine
Trade helps to enjoy the returns to scale.
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Evaluate the following statements:
a. Developed countries have nothing to gain by trading with developing countries.
b. Developed countries get all of the gains from trade when they trade with developing countries because they can dictate their prices to these countries.
c. The United States can no longer compete in world markets because American wages are too high.
Each country should specialize in producing that good for which it
a. has a comparative advantage
b. has an absolute advantage
c. it has a higher opportunity cost
According to the theory of comparative advantage, countries gain from trade because
___a. trade makes firms behave more competitively, reducing their market power.
___b. all firms can take advantage of cheap labor.
___c. output per worker in each firm increases.
___d. world output can rise when each country specializes in what it does relatively best.
___e. every country has an absolute advantage in producing something.
Chapter 19 Solutions
Principles of Microeconomics California Edition 2nd Edition
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