A Country Should Export Only Those Goods for Which, Relative

question 169

Multiple Choice

A country should export only those goods for which, relative to its trading partners, it has the

• A)absolute advantage
• B)highest opportunity cost
• C)lowest production possibilities
• D)strongest demand
• E)lowest opportunity cost

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Definitions:

Price Ceiling

A legally established maximum price that can be charged for a good or service.

Deadweight Loss

The reduction in economic productivity that takes place when a good or service fails to achieve or cannot achieve its balance point.

Equilibrium Price

The rate at which the amount of products offered matches the amount of products consumers desire in the marketplace.

Demand Functions

Mathematical formulas representing the relationship between the quantity demanded of a good or service and its price, along with other factors like income and prices of related goods.