Suppose Nation 1 Has a Comparative Advantage in Good X

question 3

Multiple Choice

Suppose Nation 1 has a comparative advantage in good X over Nation 2 and the two nations are currently engaged in equilibrium trade for good X.A decrease in the cost of producing good X in Nation 2 would cause the international price of good X to _______ and the quantity of good X traded to ______.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Processing Department

A division or area within a manufacturing facility where a specific type of production occurs, focusing on a particular operation or process.

Materials

The substance or substances out of which a thing is or can be made, typically used in the context of manufacturing or production.

Equivalent Unit

A concept used in process costing that converts partially completed units into a number of equivalent fully completed units, facilitating the calculation of unit costs.

Processing Department

A division in a manufacturing operation where a specific type of process or sequence of operations is carried out on materials to convert them into finished goods.