Suppose that in Slovakia one unit of labor can produce either 16 tons of wheat or 32 tons of soy and in Poland one unit of labor can produce either 4 tons of wheat or 2 tons of soy. Given this information, which of the following statements is true?
A. Slovakia has a comparative advantage in producing neither wheat nor soy.
B. Poland has a comparative advantage in producing soy but not wheat.
C. Slovakia has a comparative advantage in producing both wheat and soy.
D. Poland has a comparative advantage in producing wheat but not soy.
Answer: D
You might also like to view...
Consider the same ultimatum game as in the previous question but consider some new preferences reflecting a desire for fairness. In particular, now assume players get 1 util per dollar earned but lose 1/4 util for the absolute difference between their monetary payoffs. Which of the following is an offer that arises in a subgame-perfect equilibrium with these new preferences?
a. 1. b. 2. c. 4. d. 5.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and current international transactions become more positive (or less negative). b. The real risk-free interest rate falls, and current international transactions become more negative (or less positive). c. The real risk-free interest rate and current international transactions remain the same. d. The real risk-free interest rate rises, and current international transactions become more negative (or less positive). e. The real risk-free interest rate rises, and current international transactions remain the same.