Mr. Loya - PPT 2.6 - Free Trade & Comparative Advantage

Open Ended

Should each individual perform both tasks independently, or should each specialize in one task and exchange services? In 2–3 sentences, justify your response using clear reasoning.

Multiple Choice

What is the significance of free trade and comparative advantage in modern economics?

• It allows countries to specialize and increase overall efficiency.

• It leads to higher prices for consumers.

• It reduces the variety of goods available.

• It discourages international cooperation.

Multiple Choice

Which economist is most closely associated with the concept of free trade, and what is one benefit of free trade according to him?

• Adam Smith; Free trade lowers prices for consumers.

• John Maynard Keynes; Free trade increases government revenue.

• Karl Marx; Free trade reduces inequality.

• Milton Friedman; Free trade increases inflation.

Multiple Select

Select all statements that correctly describe comparative and absolute advantage.

• Comparative advantage means producing a good at a lower opportunity cost than others.

• Absolute advantage means producing more of a good overall than others.

• A country with absolute advantage always has comparative advantage.

• Comparative advantage helps countries decide what to produce and trade.

Multiple Choice

Which country has the comparative advantage in producing trucks, based on the data provided?

• Japan

• U.S.

• Both

• Neither