Suppose That Country a Is Twice as Good at Producing

question 9

Multiple Choice

Suppose that country A is twice as good at producing widgets as country B.If the currency of B is twice as valuable as the currency of A,

• A)the comparative advantage will shift to an absolute advantage.
• B)trade will be an improved outcome for both A and B.
• C)the comparative advantage could be canceled out.
• D)none of the options

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Definitions:

Advertised Price

The price of a product or service that has been publicly communicated to potential buyers through various marketing channels.

Reasonable Value

A fair market price or level of compensation that would be deemed equitable under normal circumstances.

Gratuitous Promise

A promise for which no consideration is given or required in return, often unenforceable without a deed or under specific legal conditions.

Consideration

In contract law, consideration refers to the value (such as money, a service, or a promise) that is given in exchange for a contractual obligation from the other party.