PPC, Comparative Advantage, Trade

Which of the following will cause an outward shift of the PPC?

• An decrease in the amount of resources available

• A technological change that improves production

• An increase in demand for a product

• The opportunity to produce another product

• A shift in the priorities of the manufacturer

There are opportunities for mutually beneficial trade between two countries whenever:

• no country has an absolute advantage in producing both goods.

• the production possibilities curves of the two countries are identical.

• each country has a comparative advantage in making something.

• the countries are similar in size.

• one can produce more of everything than the other.

France and England both produce wine and cloth under conditions of constant opportunity costs. France will have a comparative advantage in wine production if:

• it can produce more wine than England.

• its labor productivity in wine production is greater than England's.

• the absolute cost of producing wine is lower in France than in England.

• the opportunity cost of wine production is lower in France than in England.

• it can produce more cloth than England.

Which of the following is a true statement about the graph?

• Country A has an absolute advantage in wheat and textile production.

• Country B has an absolute advantage in wheat and textile production.

• Country A has an absolute advantage in wheat production.

• Country B has an absolute advantage in wheat production.

• Country A has an absolute advantage in textile production.

Which PPC represents unemployment in an economy?

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