A nation's comparative advantage in the production of an item is determined by:
A. wage rates and other input costs.
B. the total and marginal costs of producing the item.
C. the opportunity cost of producing the item relative to a trading partner's opportunity cost.
D. which country has already specialized in the production of the item.
Answer: C
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During the 1970s in the U.S. ________
A) the inflation rate peaked at over 14% B) oil prices quadrupled C) the unemployment rate rose above 8% D) all of the above E) none of the above
Juanita, a lawyer, can type faster than Jill, her secretary. Jill, on the other hand, does not have the ability or skills to practice law. Applying the principles of international trade to this situation, an economic consultant advises Juanita to:
a. fire Jill, practice law during the day, and do her own typing at night. b. practice law and leave all the typing to the secretary. c. divide her time equally between typing and practicing law. d. quit practicing law and take a job as a secretary. e. have Jill attend law school.