Suppose That,given the Same Number of Workers,the United States Can

question 85

Multiple Choice

Suppose that,given the same number of workers,the United States can produce two times as many TVs or 20 times as many potatoes as Chile.Which of the following statements is true?

• A)Chile should trade with the United States for potatoes because the United States has an absolute advantage in the production of potatoes.
• B)Chile should trade with the United States for TVs because the United States has an absolute advantage in the production of potatoes.
• C)The United States can benefit from trading TVs but not potatoes with Chile.
• D)None of these statements is necessarily true.

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Definitions:

Technical Merits

The inherent value or quality of a project, system, or process based on its technical specifications, efficiency, and effectiveness.

Statutory Rate

The legally enforced tax rate set by government legislation.

Differential Tax Rates

Different rates of taxation applied to different levels of income, types of taxpayers, or types of activities, to achieve various economic or social objectives.

Effective Rate

The interest rate on a loan or financial product, re-calculated to include all fees and compounded interest, showing the true cost of the loan over its term.