Comparative Advantage Homework Video

Which of the following is true of comparative advantage?

• It isolates people from one another.

• It leads to increases in labor costs.

• It leads to increases in the production of goods.

• It leads to increases in the prices of goods.

Bob's and Ann's capacity to produce a certain number of bananas and fish given a fixed amount of resources would best be depicted by the

• Circular Flow Model

• Production Possibilities Model

• Supply and Demand Model

• Factors of Production

Bob and Ann increased their total production of each good (bananas and fish) because they

• divided the quantity of each good produced evenly between themselves.

• traded with another farmer to increase their supply of each good.

• only produced the quantity of each good that each needed for their own consumption.

• devoted the majority of their resources to producing one good (Bob - bananas; Ann - fish)

Under the principle of comparative advantage, a nation should produce those goods for which they have the lowest

• Supply

• Demand

• Opportunity Cost

• Scarcity

Which of the following is true when nations specialize and trade under the principle of comparative advantage?

• More goods are produced by each nation.

• More goods are consumed by each nation.

• Both nations benefit from trade.

• All of these are true.