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Questions and Answers
When a country requires fewer resources to produce a product than other countries, it is said to have a(n):
When a country requires fewer resources to produce a product than other countries, it is said to have a(n):
- Lower opportunity cost of producing the product
- Higher opportunity cost of producing the product
- Absolute advantage in the production of the product (correct)
- Comparative advantage in the production of the product
When a country requires more resources to produce a product than other countries, it is said to have a(n):
When a country requires more resources to produce a product than other countries, it is said to have a(n):
- Comparative disadvantage in the production of the product
- Higher opportunity cost of producing the product
- Absolute disadvantage in the production of the product (correct)
- Lower opportunity cost of producing the product
The primary explanation of trade among nations is Ricardo's theory of:
The primary explanation of trade among nations is Ricardo's theory of:
- Comparative advantage (correct)
- Offshoring (i.e., when a firm in one nation purchases unfinished products internationally and adds further processing to sell in the domestic market)
- Absolute advantage
- Resource abundance
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
According to Ricardo:
According to Ricardo:
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
Which of the following is NOT a reason why countries trade goods with one another (from an economist’s point of view)?
Which of the following is NOT a reason why countries trade goods with one another (from an economist’s point of view)?
A country's factors of production include its:
A country's factors of production include its:
Which of the following is NOT considered to be a factor of production?
Which of the following is NOT considered to be a factor of production?
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
The focus of the Ricardian model is on how:
The focus of the Ricardian model is on how:
Which of the following is a reason why countries might not trade goods with one another based on the economist’s point of view?
Which of the following is a reason why countries might not trade goods with one another based on the economist’s point of view?
Which of the following is considered a factor of production according to the text?
Which of the following is considered a factor of production according to the text?
Based on the text, what is the focus of the Ricardian model?
Based on the text, what is the focus of the Ricardian model?
In trade, if a nation can produce a good with fewer resources due to technology, it is known as a(n):
In trade, if a nation can produce a good with fewer resources due to technology, it is known as a(n):
What is NOT a reason why countries trade goods with one another according to the text?
What is NOT a reason why countries trade goods with one another according to the text?
Which of the following is NOT considered a factor of production according to the text?
Which of the following is NOT considered a factor of production according to the text?
According to the text, which of the following is NOT a reason why countries trade goods with one another?
According to the text, which of the following is NOT a reason why countries trade goods with one another?
What is the primary explanation of trade among nations according to Ricardo's theory?
What is the primary explanation of trade among nations according to Ricardo's theory?
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
According to Ricardo, all countries can gain from trade if they export goods for which they have:
According to Ricardo, all countries can gain from trade if they export goods for which they have:
When a country requires more resources to produce a product than other countries, it is said to have a(n):
When a country requires more resources to produce a product than other countries, it is said to have a(n):
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
What is meant by a country having an absolute disadvantage in the production of a product?
What is meant by a country having an absolute disadvantage in the production of a product?
What does it mean when a country is said to have an absolute advantage in the production of a product?
What does it mean when a country is said to have an absolute advantage in the production of a product?
What is David Ricardo's belief about trade according to his theory of comparative advantage?
What is David Ricardo's belief about trade according to his theory of comparative advantage?
According to Ricardo's theory, what increases a nation's total output through international trade?
According to Ricardo's theory, what increases a nation's total output through international trade?
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Study Notes
Comparative Advantage and International Trade
- A country has an absolute advantage when it requires fewer resources to produce a product than other countries.
- A country has an absolute disadvantage when it requires more resources to produce a product than other countries.
- Ricardo's theory of trade among nations is based on the concept of comparative advantage.
- The focus of the Ricardian model is on how differences in labor productivity influence international trade patterns.
- According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because countries specialize in producing goods for which they have a lower opportunity cost.
- A country's factors of production include its labor, capital, and natural resources.
- Technology is not considered a factor of production.
- If a nation can produce a good with the fewest resources due to technology, it is known as having an absolute advantage.
- Countries trade goods with one another because of differences in opportunity costs, not because of differences in absolute costs.
- Countries might not trade goods with one another due to transportation costs, tariffs, and quotas.
- According to Ricardo, all countries can gain from trade if they export goods for which they have a comparative advantage.
- International trade increases a nation's total output because countries specialize in producing goods for which they have a comparative advantage.
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