question
A world price for a good is
answer
the prevailing price of the good in the global market
question
If the domestic price of a good in a country is higher than the world price, the country will become an importer of the good (True/False)
answer
true
question
Which of the following can be a source of a country's comparative advantage
answer
climatic conditions
question
There are mutually beneficial gains from trade if opportunity costs differ (True/False)
answer
true
question
When two firms have different opportunity costs of producing two goods, each firm will always have a comparative advantage in the production of one of the goods (True/False)
answer
true
question
Specialization occurs when each individual, firm, or country
answer
produces only a few specific goods and relies on trade for the other goods and services it needs
question
Trade between two nations
answer
results in the maximization of total production
question
Which of the following best describes a production possibilities curve
answer
a relationship showing the maximum production of one good for a given level of production of another good
question
A machine can manufacture 1 unit of Good X in 2 hours and 1 unit of Good Y in 1 hour. Assuming that the machine is used for 10 hours, which of the following combinations will lie on the production possibilities curve
answer
3X and 4Y
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