Trade Between Two Countries

question 12

Multiple Choice

Trade between two countries:

• A) results in more choices and better prices for consumers.
• B) may cause job loss and firm closings in the country without the comparative advantage.
• C) is always positive for both consumers and producers.
• D) results in more choices and better prices for consumers but may cause job loss and firm closings in the country without the comparative advantage.

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Definitions:

Supply Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good that suppliers are willing to provide.

Tax Revenue

The earnings obtained by governments from tax collection.

Consumer Surplus

The contrast between what consumers intend to pay for an item or service and the real cost they bear.

Producer Surplus

The gap between the price producers are prepared to take for a product and the price they end up getting.