Comparative Advantage and Gains from Trade (HSC SSCE Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What was the main goal of mercantilism before Adam Smith?
What was the main goal of mercantilism before Adam Smith?
Maximize exports & minimize imports
What does absolute advantage mean?
What does absolute advantage mean?
Producing more output w/ same resources
What is the main weakness of absolute advantage theory?
What is the main weakness of absolute advantage theory?
Countries w/o absolute advantage can't trade
What should countries specialize in according to comparative advantage?
What should countries specialize in according to comparative advantage?
Goods w/ lower opportunity cost
If a country makes 200 grapes OR 50 cheese, what's the opportunity cost of 1 cheese?
If a country makes 200 grapes OR 50 cheese, what's the opportunity cost of 1 cheese?
grapes
In the example, Australia's opportunity cost for grapes is & France's is . Who specializes in grapes?
In the example, Australia's opportunity cost for grapes is & France's is . Who specializes in grapes?
Australia (lower opportunity cost)
Can one country have comparative advantage in all products?
Can one country have comparative advantage in all products?
No, impossible by definition
What does trade allow countries to do?
What does trade allow countries to do?
Consume beyond their PPC
What happens when a country's terms of trade improve?
What happens when a country's terms of trade improve?
Buy more imports w/ given exports
What real-world factor limits the comparative advantage model?
What real-world factor limits the comparative advantage model?
Labour can't move easily between industries