If the Residents of a Country Specialize in a Good

question 18

Multiple Choice

If the residents of a country specialize in a good in which they have a comparative advantage and trade with residents in another nation, the residents in the first country

• A)can consume more than they could without trade.
• B)can produce more than they could without trade.
• C)will have a lower standard of living.
• D)will be exploited by the second nation.

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Definitions:

Substitute Good

Refers to a product or service that a consumer sees as the same or similar to another product, thus they can be used interchangeably.

Substitute Goods

Products or services that can be used in place of each other, where the consumption of one increases the likelihood of the other being consumed less.

Demand Curve

A graph showing the relationship between the quantity of a goods or services demanded and its price, usually downward sloping.

Price Increase

A rise in the cost of goods or services over time, affecting the purchasing power of money.