A country possesses a comparative advantage in the production of a product if
A) the opportunity cost, in terms of the amount of other products that it gives up to produce this product, is lower than it is for its trading partners.
B) it possesses an absolute advantage in the production of this good compared to its trading partners.
C) it is able to produce less of this good per worker than its trading partners.
D) it can produce more of this good per hour than its trading partners.
A
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Refer to Figure 19-10. Under the Bretton Woods System of exchange rates, if the par exchange rate was $2 per pound in the figure above, and equilibrium persisted at $3, then this was evidence of ________ and the IMF would allow a ________ in the
exchange rate. A) fundamental disequilibrium; revaluation B) fundamental disequilibrium; devaluation C) fundamental overvaluation; revaluation D) fundamental overvaluation; devaluation