Scenario 20.2 Suppose Labor Productivity Differences Are the Only Determinants of Comparative

question 76

Multiple Choice

Scenario 20.2
Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and Ghana produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa.
-The proportion of domestic demand for a good that is satisfied by domestic production relative to that supplied by imports is determined by:

• A)the interplay of domestic demand and supply curves and the domestic equilibrium price of the good.
• B)the interplay of demand and supply curves in the international market and the international equilibrium price of a good.
• C)the interplay of domestic supply and demand curves and the international equilibrium price of a good.
• D)the different trade restrictions like tariffs and quotas created by the domestic government.
• E)the interplay of demand and supply curves in the international market and the domestic price of the good

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