If Wendy can produce more of all goods than Tommy in an hour, then
A) Wendy has an absolute advantage in all goods.
B) Wendy does not need to trade with Tommy in order to achieve the gains from trade.
C) Wendy has a comparative advantage in all goods.
D) Tommy has an absolute advantage in all goods.
E) Only Tommy but not Wendy can benefit from trade between the two of them.
A
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When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as
A) an external benefit. B) an external cost. C) a marginal cost. D) an equilibrium social output. E) a Coasian good.
Compared to the closed economy Keynesian model, the open economy model in which imports are a function of income has an investment multiplier that is
a. smaller. b. larger. c. equal. d. equal to 1.