When the Principle of Comparative Advantage Determines Trade, Then a Country

question 197

Multiple Choice

When the principle of comparative advantage determines trade, then a country will

• A) specialize only in that good with the highest opportunity cost.
• B) specialize only in goods with the lowest opportunity costs.
• C) specialize only in that good where output is less per worker hour than another country.
• D) specialize only in that good where production costs are more than average total costs.

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Definitions:

Modified Duration

A measure indicating the sensitivity of a bond's price to changes in interest rates, estimating the percentage price change for a parallel shift in yield curves.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment's cost.

Market Efficiency

A concept that describes the degree to which stock prices and other securities' prices reflect all available, relevant information.