Suppose that only two goods are produced in an economy. If a country possesses the comparative advantage in the production of one good then it:
A. must also possess the comparative advantage in the production of the other good.
B. must also possess the absolute advantage in the production of that good.
C. cannot also possess the comparative advantage in the production of the other good.
D. cannot also possess the absolute advantage in the production of that good.
C. cannot also possess the comparative advantage in the production of the other good.
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For some investment projects, typically large-scale and long-term, such as housing construction or expansion of automobile assembly lines,
a. the interest rate has no influence on the investment decisions b. investment decisions depend directly on saving by firms in those industries c. slight changes in the interest rate rarely affect decisions d. interest charges are an important cost factor e. autonomous investment varies according to production quotas
Answer the following questions true (T) or false (F)
1. Comparative advantage is a monetary concept and is affected by changes in exchange rates or inflation. 2. Comparative advantage based on nonmarket factors are dependent on politics rather than economics for sustained existence. 3. A tariff-rate quota limits the quantity of a good imported just like an import quota.