A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

A) reap all of the gains from trade with
B) reap fewer of the gains from trade with
C) specialize in producing capital goods and trade with
D) grow slower than


Answer: C

Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table gives their production possibilities. With specialization and trade, Sweet Pansy produces ________ and Blue Violet produces ________:

Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table gives their production possibilities. With specialization and trade, Sweet Pansy produces ________ and Blue Violet produces ________:

A) 150 coffeepots, 150 teapots
B) 150 teapots, 75 coffeepots
C) 100 teapots and 25 coffeepots, 100 teapots and 50 coffeepots
D) 150 teapots and 150 coffeepots, nothing


Answer: A

Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table gives their production possibilities:

Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table gives their production possibilities:

A) Blue Violet has a comparative advantage in teapots.
B) Both have a comparative advantage in teapots.
C) Sweet Pansy has an absolute advantage in teapots.
D) Sweet Pansy has a comparative advantage in teapots.


Answer: A

Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

A) Blue Violet; Orange Rose
B) Orange Rose; Orange Rose
C) Blue Violet; Blue Violet
D) Orange Rose; Blue Violet


Answer: A