Question :
11) There will be no gains from specialization and trade : 1384514
11) There will be no gains from specialization and trade between two countries if
1) neither country has an absolute advantage in the production of any good;
2) neither country has a comparative advantage in the production of any good;
3) opportunity costs are the same in the two countries.
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 2 and 3
12) There will be no gains from specialization and trade between two countries if
1) neither country has an absolute advantage in the production of any good;
2) neither country has a comparative advantage in the production of any good;
3) opportunity costs differ too much between the two countries.
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 2 and 3
13) Consider two countries that can produce rice and other products. If neither country has an absolute advantage in the production of rice,
A) there is no possibility that either country will import rice from the other.
B) neither country can possibly have a comparative advantage in the production of rice.
C) rice will still be traded as long as one of the countries has a comparative advantage in its production.
D) the opportunity cost of producing rice must be identical in the two countries.
E) then rice should not be produced.
14) If a country has a comparative advantage in the production of soybeans, and it trades freely with other countries, it will most probably
A) derive no advantage from any trade in soybeans.
B) increase its consumption of soybeans.
C) export soybeans.
D) import soybeans.
E) not consume soybeans.
15) Consider a country that is initially autarkic and then engages freely in international trade. If a country has a comparative advantage in the production of soybeans, it will most probably
A) derive no advantage from any trade in soybeans.
B) decrease the production of soybeans for domestic consumption.
C) increase the production of soybeans for domestic consumption.
D) increase the production of soybeans to allow for the export of soybeans.
E) import soybeans
16) Refer to Table 33-1. Country A has an absolute advantage in producing good X if
A) (Xa/Ya) is less than (Xb/Yb).
B) Xa is less than Xb.
C) Xa is less than Ya.
D) (Xa/Xb) is less than (Ya/Yb).
E) Xa = Xb.
17) Refer to Table 33-1. Country A has a comparative advantage in producing good X if
A) (Xa/Ya) is less than (Xb/Yb).
B) (Xa/Xb) is greater than (Ya/Yb).
C) (Xa/Ya) is greater than (Xb/Yb).
D) Xa is less than Yb.
E) Xa = Xb.
18) Refer to Table 33-1. There is no scope for gains from trade due to specialization between the two countries if
A) (Xa/Ya) is greater than (Xb/Yb).
B) Xa is equal to Yb.
C) (Xa/Ya) is equal to (Xb/Yb).
D) Xa is less than Yb and Ya is less than Yb.
E) Xa is less than Xb.
19) Suppose that Spain is currently producing 90 units of wine and 10 units of cheese, but to produce 10 more units of cheese it must sacrifice 30 units of wine. Further, suppose that Portugal produces 45 units of wine and 45 units of cheese, but to produce 10 more units of cheese it must sacrifice only 10 units of wine. It can be concluded that
A) Portugal has an absolute advantage in both wine and cheese production.
B) Portugal has an absolute advantage in wine production and Spain has an absolute advantage in cheese production.
C) Spain has an absolute advantage in both wine and cheese production.
D) neither country has an absolute advantage in the production of either wine or cheese.
E) more information is needed to conclude anything about absolute advantage in either country.
20) Suppose that Spain is currently producing 90 units of wine and 10 units of cheese, but to produce 10 more units of cheese it must sacrifice 30 units of wine. Further, suppose that Portugal produces 45 units of wine and 45 units of cheese, but to produce 10 more units of cheese it must sacrifice only 10 units of wine. It can be concluded that
A) Portugal has an absolute advantage in both wine and cheese production.
B) Portugal has an absolute advantage in wine production and Spain has an absolute advantage in cheese production.
C) Spain has an absolute advantage in both wine and cheese production.
D) Spain has a comparative advantage in the production of wine and Portugal has a comparative advantage in the production of cheese.
E) more information is needed to conclude anything about comparative advantage in either country.
