S2-Week 5-International Trade(Retake)

When determining comparative advantage one must determine

• Absolute Advantage

• Comparative Advantage

• Opportunity Cost

• Specialization

The diagram shows the production possibilities curve for Country Y. Which of the following statements is NOT true?

• The production at poine E is inefficient.

• The production at poine D is inefficient.

• The production at poine C is efficient.

• The production at poine A is producting more butter but less machines.

Who has an absolute advantage in producing cars?

• Japan

• Korea

• None of them

• Both

Who has the comparative advantage in producing bicycles?

• Japan

• Korea

Which country should export cars?

• Japan

• Korea

Which country has absolute advantage in producing Headphones?

• China

• Singapore

Which country has comparative advantage in producing chemicals?

• China

• Singapore

Which country should import chemicals?

• China

• Singapore

When nations exchange, it is called—————————

• Absolute advantage

• Comparative advantage

• Specialization

• International Trade

Why are most countries better off specializing in the production of particular goods, and then trading with other nations to obtain whatever else they need?

• Greater investment of capital goodsincreases productivity.

• Transportation costs are lower than theywere a century ago.

• People have limited resources to satisfyunlimited wants.

• Resources are not evenly distributed among countries.