Comparative Advantage & International Trade

Which of the following is a situation in which trade is advantageous?

• Which of the following is a situation in which trade is advantageous?

• Two countries produce different goods for different costs.

• Two countries produce no goods.

• Two countries have the same markets.

Which of the following is a reason that a government would support trade barriers?

• To help protect young domestic industries

• To increase its exports

• To promote international competition

• To close down domestic industries

A primary reason why nations conduct international trade is because of differences in-

•  Resource availabilities.

• Location.

• Tastes.

• Incomes.

International trade in goods and services tends to-

• increase all domestic costs and prices.

• keep all domestic costs and prices at the same level.

• lessen the amount of competition facing home manufacturers.

• increase the amount of competition facing home manufacturers.

Which of the following best completes the diagram above?

• Effects of increased European immigration

• Reasons for the development of international trade 

• Causes of government regulation of business

• Reasons for widespread employment

A country has a comparative advantage in the production of a good only when it-

• can produce the good with fewer resources than another country.

• has the lowest opportunity cost of producing the good.

• has the greatest opportunity cost of producing the good.

• has the absolute advantage and the lowest opportunity cost of producing a good.

If Julissa has the absolute advantage in both gardening and baking when compared to Robert, then-

• Julissa cannot benefit by trading with Robert.

• Julissa can benefit by specializing in gardening and trading with Robert if he specializes in baking.

• Julissa can benefit by specializing in baking and trading with Robert if he specializes in gardening

•  Julissa and Robert can benefit by specializing and trading though it cannot yet be determined which one would specialize in what.

In one week, Jamie can knit 10 sweaters OR bake 5 dozen cookies while Terry can knit 10 sweaters OR bake 10 dozen cookies. Given this information, we can know that

• Jamie has the absolute and comparative advantage in producing both goods

• Terry has the absolute and comparative advantage producing both goods.

• Terry has the absolute advantage in producing both products and the comparative advantage in baking cookies.

• Terry as the absolute advantage in producing both goods and the  comparative advantage in knitting sweaters.

When the United States places an import quota on imported sugar, we expect which of the following effects?

• Consumers seek substitutes for sugar and products that use sugar.

• Consumers consume more sugar and products that use sugar.

• The supply of sugar increases.

• Net exports in the United States fall.

Which country has an absolute advantage in Product A?

• USA

• Great Britain

• Neither

• both