WorksheetsInternational Econs_Chap 3: Law of comparative advantage
Total questions: 10
Worksheet time: 9mins
A nation engaging in trade according to the Ricardian model will find its consumption bundle
inside its production possibilities frontier.
on its production possibilities frontier.
outside its production possibilities frontier.
inside its trade-partner's production possibilities frontier.
A country has a ________ in producing a good if the opportunity cost of producing that good in terms of other goods is lower in that country than it is in other countries.
comparative advantage
absolute advantage
trading advantage
cost advantage
A country engaging in trade according to the principles of comparative advantage gains from trade because it.......
is producing exports indirectly more efficiently than it could alternatively.
is producing imports indirectly more efficiently than it could domestically.
is producing exports using fewer labor units.
is producing imports indirectly using fewer labor units.
If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):
nation A has a comparative disadvantage in commodity X
nation B has a comparative disadvantage in commodity Y
nation A has a comparative advantage in commodity X
nation A has a comparative advantage in neither commodity
The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to ......
differences in technology.
differences in preferences.
differences in labor productivity.
differences in resources.
The Ricardian model demonstrates that ......
trade between two countries will benefit both countries.
trade between two countries may benefit both regardless of which good each exports.
trade between two countries may benefit both if each exports the product in which it has a comparative advantage.
trade between two countries may benefit one but harm the other.
The number of gallons of wine the economy would have to give up in order to produce an extra pound of cheese is called
the opportunity cost of a pound of cheese in terms of wine.
the opportunity cost of a gallon of wine in terms of cheese.
the opportunity cost of a pound of cheese and a gallon of wine.
the opportunity cost of either a pound of cheese or a gallon of wine.
When a country can produce a good or service at a lower opportunity cost than another country, the country is said to have a(n) ......
comparative advantage
absolute advantage
trading advantage
cost advantage
In order to produce winter roses, the U.S. economy must produce fewer of other things, such as computers. Such a trade-off is an example of .....
opportunity cost.
trade cost.
sunk cost.
production cost.
In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to .....
France having a comparative advantage over Germany in ships.
France having a comparative disadvantage compared to Germany in autos and ships.
Germany having a comparative advantage over France in autos and ships.
France having no comparative advantage over Germany.
