Nation Alpha Has a Comparative Advantage in Product X and Nation

question 44

Multiple Choice

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if:

• A) The exchange ratio of X for Y is fixed
• B) The terms of trade increase in both nations
• C) There is excess capacity in both economies
• D) The prices charged for X and Y reflect their domestic opportunity costs

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Definitions:

Social Desirability Bias

The tendency of respondents to answer questions in a manner that will be viewed favorably by others, often leading to inaccuracies in surveys or research.

Experimenter Bias

A form of bias introduced by the experimenter whose expectations about the outcome of the experiment can be subtly communicated to the participants in the experiment.

Faulty Memory

Errors or inaccuracies in recalling past events or information, which can arise from various factors such as misinformation, distortion, or forgetting.

Double-Blind Research Study

An experimental research design in which neither the participants nor the researchers know who is receiving the experimental treatment and who is receiving a placebo, reducing biases in the results.