Test your understanding of the economics of free trade and protection. Whos was

Question

Test your understanding of the economics of free trade and protection. Whos was the first writer to explain fully the theory of comparative advantages? A Adam smith B David Ricardo International specialzation and trade may be explained with referene to A a difference in comparative advantage between countries. B the existence of economies of sclae in production. C both A and B. Ceteris paribus, which countries would expect to rely less on foreign trade as a percentage of their economic activity? A larger countries B smaller countries Which statment about international trade is TRUE? A International trade has quite possibly contributed to the widening gap between the wages of low-skilled and high-skilled labor in the U.S. B international trade has become relatively less important as trasport costs have fallen. C International trade has lowered living standards for most Americans. If the government were to set a traiff on imported sugar high enough to eliminate all imports of sugar, the total costs to the U.S. U.S economy would be equal to

Explanation / Answer

46.

Correct Answer:

D. Minimum wage laws encourage some unskilled workers to drop out of the labor force.

Explanation:

Minimum wage laws are there to help unskilled workers to get at least a minimum wage rate for their services. It prevents exploitation of unskilled workers by the employers. It results in increased supply of labor. Thus, it does not encourage unskilled workers to drop out of the labor force.

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