Tale Incert DesignLayout Sign in Share c. a U.S. export and an Italian import d.

Question

Tale Incert DesignLayout Sign in Share c. a U.S. export and an Italian import d. neither an export nor an import for either country 3. Which of the following is a normative statement? a. The main reason why the United States has a trade deficit with China is because China's trade practices are unfair b. The United States has a comparative advantage compared to the European Union in the production of wheat. Both these statements are normative. c. d. Neither of these statements is normative. 4. Comparative advantage implies that a country will a. export goods produced by domestic industries with low wages relative to its trading partners. b. export those goods in which the country has a comparative c find it difficult to conclude free trade agreements with other nations. d. import those goods in which the country has a comparative advantage adva ntage If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade? a. Mexico has a lower opportunity cost of producing bacon than Mexico and Mexico has a 5. comparative advantage in producing fishing poles. Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon. Canada has a higher opportunity cost of producing fishing poles than Mexico, and Mexico has a higher opportunity cost of producing bacon than Canada Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon than Mexico b. c. d. 727 PM e to

Explanation / Answer

Answer : (3) c. both these statements are normative. Because these are the examples of value judgment. Normative statement is an objective which carry the judgment of values. In the given question options (a) and (b) can be judge by the values. Therefore, these two are normative statement.

(4) b. export those goods in which the country has a comparative advantage.

Because in that country those goods are cheaper than other countries. The opportunity cost is lower for those goods in that country. Hence this country can produce more over domestic demand. Therefore the excess production of goods are exported by the country and gains.

(5) c. Canada has higher opportunity cost of producing fishing poles than Mexico, and Mexico has higher opportunity cost of producing bacon than Canada.

Hence Canada export bacon because of lower opportunity cost and Mexico export fishing poles because of lower opportunity cost. When opportunity cost is lower for a particular good in a country then that country has comparative cost advantage in producing that good than others. As a result this country export that particular good and other country import that good. Therefore, opinion (c) is correct.

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