If Two Nations Want to Trade with One Another,they Can

question 125

Multiple Choice

If two nations want to trade with one another,they can determine their respective comparative advantages by

• A)hiring economists to gather and interpret the relevant data.
• B)first determining which has absolute advantage in the production of goods and services.
• C)allowing firms in each country to freely engage in international trade.
• D)making certain that the prices of tradable goods and services are equal in both nations.
• E)computing the opportunity costs of all goods and services.

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Definitions:

Automates

The process of making an operation or procedure carried out without human intervention through the use of mechanical or electronic devices.

Agency

A relationship where one party (the agent) is authorized to act on behalf of another (the principal) in dealing with third parties.

Impossible

A term used to describe a task or condition that cannot realistically be fulfilled or achieved.

Agency Relationship

A legal arrangement in which one party, the agent, acts on behalf of another party, the principal, in conducting transactions with third parties.