Which of the following phenomena can be explained by the simple comparative advantage theory?
A. A country with little skilled labor tends to export highly technical goods.
B. A country imports and exports the same goods.
C. A country tends to import the goods that it can produce at a lower opportunity cost.
D. A country that has a vast amount of farmland tends to export agricultural goods.
Answer: D
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In the specific factors model, the effects of trade on welfare are ________ for mobile factors, ________ for fixed factors used to produce the exported good, and ________ for fixed factors used to produce the imported good
A) ambiguous; positive; negative B) ambiguous; negative; positive C) positive; ambiguous; ambiguous D) negative; ambiguous; ambiguous E) positive; positive; positive
Use the information in Scenario 4.2. What is the price elasticity of demand if the price of artichokes is $10?
A) 0 B) -0.25 C) -1 D) -4 E) negative infinity