18H. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11. Production of traded goods falls in countries that export them.
12. International trade allows the world to use its resources more efficiently but one countryâs gains are another countryâs losses.
13. A countryâs ability to produce a specific good with fewer resources than another country determines whether it has an absolute advantage in producing the good.
14. Comparative advantage is based on the opportunity costs of producing particular goods.
15. World output will be maximized when each country produces according to its comparative advantage.
16. Limits to mutually beneficial trade are determined by the opportunity costs of producing the two goods in each country.
17. Assume that the limits to mutually beneficial trade between the U.S. and India are 1Machine = 3Cloth and 1Machine = 5Cloth, respectively. The closer the ratio is to the U.S. ratio of 1Machine = 3Cloth, the better it is for India.
18. Small countries tend to benefit more from trade because their demand for products from large countries would tend to be lower than the large countryâs demand for their products.
19. Even with international trade, a country must remain inside or on its production possibilities frontier.
20. Constant opportunity costs result in upward sloping supply curves and concave production possibility frontiers.
18H. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11. Production of traded goods falls in countries that export them.
12. International trade allows the world to use its resources more efficiently but one countryâs gains are another countryâs losses.
13. A countryâs ability to produce a specific good with fewer resources than another country determines whether it has an absolute advantage in producing the good.
14. Comparative advantage is based on the opportunity costs of producing particular goods.
15. World output will be maximized when each country produces according to its comparative advantage.
16. Limits to mutually beneficial trade are determined by the opportunity costs of producing the two goods in each country.
17. Assume that the limits to mutually beneficial trade between the U.S. and India are 1Machine = 3Cloth and 1Machine = 5Cloth, respectively. The closer the ratio is to the U.S. ratio of 1Machine = 3Cloth, the better it is for India.
18. Small countries tend to benefit more from trade because their demand for products from large countries would tend to be lower than the large countryâs demand for their products.
19. Even with international trade, a country must remain inside or on its production possibilities frontier.
20. Constant opportunity costs result in upward sloping supply curves and concave production possibility frontiers.
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(Table: Production Possibilities for the U.S. and Great Britain) The table shows production possibilities for the United States and Great Britain, assuming that both countries could choose to devote all resources to producing either good. Which statement is correct with regard to the information in the table? |
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a. The U.S. has a comparative advantage in producing music CDs because it can produce more music CDs than anything else. b. These countries should not engage in trade with one another, because the transportation costs of these goods are too high. c. To determine which country has a comparative advantage in either good, we would need to know the monetary measure of production costs for both countries. d. The U.S. has a comparative advantage in producing athletic shoes because it can do so at a lower opportunity cost. |
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