Under the Theory of Comparative Advantage, Liberalization of International Trade

question 84

Multiple Choice

Under the theory of comparative advantage, liberalization of international trade will

• A)enhance the welfare of the world's citizens.
• B)create unemployment and displacement of workers permanently.
• C)result in higher prices in the long run as monopolist are able to charge higher prices after eliminating their competitors.
• D)all of the above

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Definitions:

Marginal Product Capital

This refers to the additional output produced as a result of using one more unit of capital, holding other inputs constant.

Maximum Profit Equilibrium

The point at which a firm achieves its highest level of profit given its production and cost constraints.

Price Labor

The cost associated with hiring workers or the wage that employers pay to their employees for their labor.

ATMs

Automated Teller Machines, devices that allow bank customers to perform financial transactions without the need for a branch representative.