If the United States has an absolute advantage relative to Mexico in all product

Question

If the United States has an absolute advantage relative to Mexico in all products, neither nation can benefit from trade. Mexico can benefit from trade but the United States cannot. Mexico will not have a comparative advantage in any good. both nations can still benefit from trade. Suppose Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize and trade according to their comparative advantage, all individuals in both countries will benefit. Greece will specialize in and export cars. Germany will increase its production of cars relative to the no-trade situation. Germany will increase its production offish relative to the no-trade situation. The difference between production possibilities frontiers that are bowed out and those that are linearis that: bowed out production possibilities frontiers illustrate tradeoffs where linear production possibilities frontiers do not. bowed out production possibilities frontiers show increasing opportunity cost where linear ones show constant opportunity cost. bowed out production possibilities frontiers are the result of perfectly shiftable resources where linear production possibilities frontiers are not. linear production possibilities frontiers illustrate real world conditions more than bowed out production possibilities frontiers. With trade a country is worse off because it becomes dependent on other countries. country will produce a greater variety of goods and services to trade. country will be able to consume more than it could possibly produce. country will experience a lower unemployment rate.

Explanation / Answer

1.b 2.c 3.d 4.b

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.