Questions
THC - MCD2020 - T3 - 2025 Homework Quiz 1 - Foundations of Economics and Gains from Trade
Single choice
Jack has an absolute advantage in producing widgets, when:
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Question restatement: Jack has an absolute advantage in producing widgets, when:
Option a: 'Jack's opportunity cost is constant.' This describes a property of costs per unit, not the condition for having an absolute advantage. Absolute advantage is about who can produce more with the same resources, not whether the opportunity cost remains constant.
Option b: 'Jack can produce more of it than someone else ......Login to view full explanationLog in for full answers
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Question at position 2 Which of the following is true of the absolute advantage theory of international trade? It emphasizes relative advantage in one economic activity that one nation enjoys in comparison with other nations. It divides the countries of the world into three categories based on innovation.It advocates extensive government intervention in international trade.It was the first theory that advocated free trade.
Question at position 1 Which of the following ideas is closely linked to the theory of absolute advantage? All international trade must be closely regulated by governments. Free market forces should determine how much to trade with minimal government intervention. Governments should actively protect domestic industries from imports and vigorously promote exports. Nations should specialize in economic activities in which they have comparative advantage.
Refer to the data available in Table 1. Assume both countries have equal quantities of resources. Assume they can each only produce cars and bananas. Table 1 shows the quantities of each product that each country could possibly produce using the resources available. Table 1: Production Possibilities for Country A and Country B [table] | Country A | Country B Maximum possible production of cars, assuming all resources are used for car production. | 1 million | 5 million Maximum possible production of bananas, assuming all resources are used for banana production. | 20 million | 35 million [/table] Which country has an absolute advantage in producing both products?
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