Question 1

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should
A)export copper, since that country has a comparative advantage in copper.
B)import copper, since that country has a comparative advantage in copper.
C)neither export nor import copper, since that country cannot gain from trade.
D)neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Accepted Answer

If the world price of copper is higher than the domestic price of copper without trade, it implies that the country has a comparative advantage in producing copper at a lower cost than other countries. Therefore, exporting copper would be beneficial as the country could sell its copper at a higher price in the world market and earn higher profits.

Question 2

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that
A)Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer.
B)Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples.
C)Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer.
D)Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples.

Accepted Answer

Ireland is exporting beer to China, indicating that Ireland has a comparative advantage in producing beer. Ireland is also importing pineapples from the United States, indicating that the United States has a comparative advantage in producing pineapples. Therefore, option B is the correct choice.

Question 3

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil
A)will import almonds.
B)will export almonds.
C)will either import almonds or export almonds, but it is not clear from the given information.
D)would have nothing to gain either from exporting or importing almonds.

Accepted Answer

The answer of Suppose Brazil has a comparative advantage over...

Question 4

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,
A)Vietnam has a comparative advantage over other countries and Vietnam will import textiles.
B)Vietnam has a comparative advantage over other countries and Vietnam will export textiles.
C)other countries have a comparative advantage over Vietnam and Vietnam will import textiles.
D)other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Accepted Answer

If the domestic price of textiles is higher than the world price, it implies that Vietnam is not competitive in the production of textiles. Therefore, other countries have a comparative advantage over Vietnam, and Vietnam will import textiles from those countries.

Question 5

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,
A)Japan has a comparative advantage over other countries and Japan will import automobiles.
B)Japan has a comparative advantage over other countries and Japan will export automobiles.
C)other countries have a comparative advantage over Japan and Japan will import automobiles.
D)other countries have a comparative advantage over Japan and Japan will export automobiles.

Accepted Answer

The answer of Assume, for Japan, that the domestic price...

Question 6

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,
A)Mexico has a comparative advantage over other countries and Mexico will export oranges.
B)Mexico has a comparative advantage over other countries and Mexico will import oranges.
C)other countries have a comparative advantage over Mexico and Mexico will export oranges.
D)other countries have a comparative advantage over Mexico and Mexico will import oranges.

Accepted Answer

The answer of Assume, for Mexico, that the domestic price...

Question 7

Suppose Jamaica has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over Jamaica in producing sugar. If trade in sugar is allowed, Jamaica
A)will import sugar.
B)will export sugar.
C)will either import sugar or export sugar, but it is not clear from the given information.
D)would have nothing to gain either from exporting or importing sugar.

Accepted Answer

Although Jamaica has an absolute advantage in producing sugar, other countries have a comparative advantage, which means they can produce sugar at a lower opportunity cost than Jamaica. Therefore, it would be more beneficial for Jamaica to import sugar from other countries rather than produce it domestically.

Question 8

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,
A)England has a comparative advantage over other countries and England will export wine.
B)England has a comparative advantage over other countries and England will import wine.
C)other countries have a comparative advantage over England and England will export wine.
D)other countries have a comparative advantage over England and England will import wine.

Accepted Answer

The answer of Assume, for England, that the domestic price...

Question 9

A country has a comparative advantage in a product if the world price is
A)lower than that country's domestic price without trade.
B)higher than that country's domestic price without trade.
C)equal to that country's domestic price without trade.
D)not subject to manipulation by organizations that govern international trade.

Accepted Answer

The answer of A country has a comparative advantage in...

Question 10

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,
A)England has a comparative advantage over other countries and England will export wine.
B)England has a comparative advantage over other countries and England will import wine.
C)other countries have a comparative advantage over England and England will export wine.
D)other countries have a comparative advantage over England and England will import wine.

Accepted Answer

If the domestic price of wine in England is higher than the world price, it suggests that England is not as efficient in producing wine as other countries. Therefore, other countries have a comparative advantage over England in the production of wine and England will import wine from them.

Question 11

Trade among nations is ultimately based on
A)absolute advantage.
B)strategic advantage.
C)comparative advantage.
D)technical advantage.

Accepted Answer

Trade among nations is ultimately based on comparative advantage, which is the ability of a country to produce a good or service at a lower opportunity cost than another country. It allows countries to specialize in the production of goods and services in which they have a comparative advantage and then trade with other countries to obtain goods and services that they cannot produce efficiently. This leads to increased efficiency, greater productivity, and higher economic growth for all countries involved in the trade.

Question 12

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina
A)should import apples.
B)has a comparative advantage in apples.
C)should produce just enough apples to meet its domestic demand.
D)should refrain altogether from producing apples.

Accepted Answer

The answer of If the world price of apples is...

Question 13

The price of a good that prevails in a world market is called the
A)absolute price.
B)relative price.
C)comparative price.
D)world price.

Accepted Answer

The price of a good that prevails in a world market is called the world price. This is the price that is determined by the supply and demand of the good in the global market, and it will impact the domestic market of countries that import or export the good. Therefore, the best choice is D - world price.

Question 14

The price of sugar that prevails in international markets is called the
A)export price of sugar.
B)import price of sugar.
C)comparative-advantage price of sugar.
D)world price of sugar.

Accepted Answer

The price of sugar that prevails in international markets is called the world price of sugar. This price is determined by the interaction of global supply and demand forces and is often used as a benchmark for domestic prices in sugar-producing and sugar-consuming countries.

Question 15

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,
A)the country will be an exporter of the good.
B)the country will be an importer of the good.
C)the country will be neither an exporter nor an importer of the good.
D)Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Accepted Answer

The answer of If a country allows trade and, for...

Question 16

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should
A)export copper.
B)import copper.
C)neither export nor import copper, since that country cannot gain from trade.
D)neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Accepted Answer

If the world price of copper is lower than the domestic price of copper, it indicates that other countries are producing copper at a lower cost. Therefore, it would be beneficial for the country to import copper from other countries rather than producing it domestically at a higher cost. This would enable the country to save resources and use them in other sectors where it has a comparative advantage.

Question 17

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,
A)the country will be an exporter of the good.
B)the country will be an importer of the good.
C)the country will be neither an exporter nor an importer of the good.
D)Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Accepted Answer

If the domestic price without trade is higher than the world price, it means that domestic producers are able to sell the good at a higher price than what they would receive in the world market. As a result, consumers in the domestic market will prefer to import the good at a lower price. Therefore, the country will be an importer of the good.

Question 18

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil
A)will import almonds.
B)will export almonds.
C)will either import almonds or export almonds, but it is not clear from the given information.
D)would have nothing to gain either from exporting or importing almonds.

Accepted Answer

Even though Brazil has an absolute advantage in producing almonds, if other countries have a comparative advantage, it would be more efficient for Brazil to import almonds from those countries rather than producing them domestically. Therefore, Brazil would import almonds.

Question 19

Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets,
A)Mexico has a comparative advantage over other countries and Mexico will export beets.
B)Mexico has a comparative advantage over other countries and Mexico will import beets.
C)other countries have a comparative advantage over Mexico and Mexico will export beets.
D)other countries have a comparative advantage over Mexico and Mexico will import beets.

Accepted Answer

If the domestic price of beets in Mexico is higher than the world price of beets, it suggests that other countries have a comparative advantage over Mexico in the production of beets. This means that Mexico will likely import beets from other countries to meet its domestic demand, as importing beets will be cheaper than producing them domestically.

Question 20

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,
A)Vietnam has a comparative advantage over other countries and Vietnam will import textiles.
B)Vietnam has a comparative advantage over other countries and Vietnam will export textiles.
C)other countries have a comparative advantage over Vietnam and Vietnam will import textiles.
D)other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Accepted Answer

The answer of Assume, for Vietnam, that the domestic price...

Quiz 9: Application: International Trade

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

Suppose Jamaica has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over Jamaica in producing sugar. If trade in sugar is allowed, Jamaica

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,

A country has a comparative advantage in a product if the world price is

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,

Trade among nations is ultimately based on

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

The price of a good that prevails in a world market is called the

The price of sugar that prevails in international markets is called the

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets,

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,