Assume That Greece Has a Comparative Advantage in Fish and Germany

question 50

Multiple Choice

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars.Also assume that Germany has an absolute advantage in both fish and cars.If these two countries specialize and trade so as to maximize the benefits of specialization and trade,then

• A)the two countries' combined output of both goods will be higher than it would be in the absence of trade.
• B)Greece will produce more fish than it would produce in the absence of trade.
• C)Germany will produce more cars than it would produce in the absence of trade.
• D)All of the above are correct.

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Definitions:

Factory Employees

Workers employed in a manufacturing setting, responsible for the production of goods.

Raw Materials

Basic items or goods used in the production of goods or services, which can include commodities or components before they are processed or used in manufacturing.

Indirect Materials

Materials used in the production process that are not directly included in the final product.

Indirect Labor

Refers to wages paid to employees who are not directly involved in the production of goods but support those who are.