Assume the nation of Teeveeland does not trade with the rest of the world.By comparing the world price of televisions to the price of televisions in Teeveeland,we can determine whether
A)consumer surplus exceeds producer surplus in Teeveeland.
B)Teeveeland has an absolute advantage in producing televisions.
C)Teeveeland has a comparative advantage in producing televisions.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If the price of televisions in Teeveeland is lower than the world price, it means Teeveeland has a comparative advantage in producing televisions. This is because Teeveeland can produce televisions at a lower opportunity cost than other countries. If the price of televisions in Teeveeland is higher than the world price, it means Teeveeland does not have a comparative advantage in producing televisions. Consumer and producer surplus are not relevant in this question.

Assume the Nation of Teeveeland Does Not Trade with the Rest