If a Very Small Country Trades with a Very Large

question 7

Multiple Choice

If a very small country trades with a very large country according to the Ricardian model,then

• A) the small country will suffer a decrease in economic welfare.
• B) the large country will suffer a decrease in economic welfare.
• C) the small country only will enjoy gains from trade.
• D) the large country will enjoy gains from trade.
• E) both countries will enjoy equal gains from trade.

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Definitions:

Nonlinear Relationship

A relationship between variables where the change in one variable does not result in a proportional change in the other variable.

Nonmonotonic

A description of relationships where the direction of change is not consistent across the range of variables.

Curvilinear Relationship

A relationship between two variables in which the change in one variable does not result in a linear change in the other variable.

Operationally Defining

The process of defining a concept or variable in terms of the specific procedures or measures used to produce or manipulate it.