In a Two-Nation Two-Good World, If Both Nations Have Identical

question 124

Multiple Choice

In a two-nation two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have:

• A) No comparative advantage over the other nation
• B) A comparative advantage in one good and a comparative disadvantage in the other good
• C) No absolute advantage over the other nation
• D) An absolute advantage in one good and an absolute disadvantage in the other good

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Definitions:

Unique Product

A product that is distinctive and has no exact substitutes in the market, often giving its producer a competitive advantage.

Unit Price

The cost per unit of a product or service, which allows consumers to compare prices and value among different items.

Average Revenue

The revenue earned per unit of output sold, calculated by dividing total revenue by the number of units sold.

Market Structures

The organizational and other characteristics of a market, including the level of competition, product differentiation, and the ease of entry and exit, which determine the nature of pricing and output decisions.