1., A logical sarting point from which the study of international trade begins i

Question

1., A logical sarting point from which the study of international trade begins is the principle of comparative advantage. The nation of Waterland forbids international trade. In Waterland, you can obtain a computer by trading 2 bicycles. In other countries, you can obain a computer by trading 3 bicycles. These facts indicate that 40 Questions; One point for each correct answer and 5 BONUS POINTS a Waterland has an absolute advantage, relative to other countries, in producing computers d. All of the above are correct aterland has a comparative advantage, relative to other countries, in producing bicycles. cif Waterland were to allow trade, it would export computers. 2. Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans decreases to equal the world price of beans,then which of the following is NOT consistent with the impact of a free trade? that country becomes an importer of beans. b. that country has no comparative advantage in producing beans. c at the world price,the quantity of beans supplied in that country less than the quantity of beans demanded in that country d at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. Figure#1: On Price the dingram below, Q represents the quantity of computers and P represents the price of computers. Domestic Supply World Price Domestic Demand to Figurell,.If the country does not engage in trade with the Quantity b. A+ B. rest of the world, what is its producer surplus? C.A+B+D. d. C 4 Refer to Figuret!. At the world pice as drawn, producer surplus in this as drawn, producer surplus in this computer market after d.A+B+ D. b.A+B+C C.C+B+D. trade is 5 Refer to Figure #1. The change in total surplus in this market because of trade is a. A, and this area represents a gain in total surplus because of trade. b.B, and this area represents a gain of total surplus because of trade. c. C, and this area represents a gain in total surplus because of trade. .D, and this area represents a gain of total surplus because of trade.

Explanation / Answer

First question is answered below

1.

Correct option: (c) it will export computers

Reason: Given the information,

Opportunity cost of 1 computer in Country W is 2 bicycles

Opportunity cost of 1 computer in rest of world is 3 bicycles

Thus, Country W has comparative advantage in producing computers.

And if opened to trade, W will produce and export computers.

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