Assuming a competitive world, does your country have a comparative advantage in making pizza? You can get your answer by
a. observing if your country makes more pizza than any other country
b. comparing pizza prices in other countries
c. calculating the opportunity cost of a pizza in your country
d. comparing the opportunity cost of producing pizza in your country with the opportunity cost of producing pizza in other countries
e. comparing your country's terms of trade to the terms of trade in other countries
D
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Which of the following is not correct?
a) During economic contractions most firms experience dwindling profits. b) Recessions come at irregular intervals and are almost impossible to predict. c) When real GDP expands, the rate of unemployment rises. d) Short-run fluctuations in economic activity can happen in developed countries such as the U.S.
Under a floating exchange-rate regime, following an expansion in the country's money supply, the country's monetary authority
A. must buy foreign currency in the foreign exchange market. B. may not intervene in the foreign exchange market. C. will be forced to reverse the monetary expansion. D. must buy domestic currency in the foreign exchange market.