Free Trade Between Countries

question 277

Multiple Choice

Free trade between countries:

• A)should be based on absolute advantage.
• B)always involves wealthy countries exploiting less developed nations.
• C)will shift the domestic production possibility frontier to the right.
• D)will allow for greater levels of consumption than without trade.

---

Definitions:

Quantity Supplied

The amount of a good that producers are willing and able to sell at a given price over a specified period.

Price Ceiling

A legal maximum price set by the government for certain goods or services, aimed at preventing prices from rising too high.

Shortage/Surplus

Economic conditions where the quantity demanded exceeds the quantity supplied (shortage) or the quantity supplied exceeds the quantity demanded (surplus) at the current price.

Quantity Demanded

The total amount of goods or services that consumers are willing and able to purchase at a given price within a certain period.