31) Which of the following statements is false?
A) Not all individuals in both countries are made better off as a result of international trade.
B) Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.
C) Although some individuals may not be made better off as a result of international trade, both countries may be made better off overall.
D) Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.
32) All of the following are sources of comparative advantage except
A) climate and natural resources.
B) relative abundance of labor and capital.
C) a strong foreign currency exchange rate.
D) technology.
33) The United States has developed a comparative advantage in digital computers, airliners and many prescription drugs. The source of its comparative advantage in these products is
A) a favorable climate.
B) technology.
C) abundant supplies of natural resources.
D) a strong central government.
34) Pakistan has developed a comparative advantage in the production of clothing. The source of its comparative advantage in these products is
A) a favorable climate.
B) technology.
C) abundant supplies of natural resources.
D) a large supply of unskilled workers.
35) Once an industry becomes established in a certain area firms that locate in that area gain advantages over firms located elsewhere, leading to lower costs of production. Economists refer to the lower costs that result from increases in the size of an industry in a certain area as
A) external economies.
B) positive externalities.
C) strategic advantages.
D) technological change.
36) China has developed a comparative advantage in the production of children’s toys. The source of this comparative advantage is
A) superior process technology.
B) a large supply of unskilled workers and relatively little capital.
C) investment in capital used to produce toys.
D) a large supply of natural resources.
37) Costa Rica is a leading exporter of bananas. What explains the comparative advantage of this country in banana production?
A) climate and soil conditions in Costa Rica which are well-suited for banana production
B) investment by multinational firms such as Chiquita Brands International and the Dole Food Company
C) a large supply of unskilled labor
D) positive externalities
38) In the past two decades the United States lost its comparative advantage in automobiles to Japan. What factor was most responsible for the development of Japan’s comparative advantage in automobiles?
A) Japanese firms excelled in process technology.
B) Japan has abundant supplies of labor.
C) Japanese firms benefited from external economies.
D) Japan has abundant supplies of natural resources needed to produce automobiles.
39) One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.
40) One of the main sources of comparative advantage is natural resources.
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