Assume That China Has a Comparative Advantage in Producing Corn

question 236

Multiple Choice

Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that

• A) China also has an absolute advantage in producing corn relative to Japan.
• B) China has a lower opportunity cost of producing corn relative to Japan.
• C) Japan has an absolute disadvantage in producing corn relative to China.
• D) Labor costs are higher for corn producers in Japan than in China.

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Definitions:

Arbitration

Process of intergroup conflict resolution in which a neutral third party is invited to impose a mutually binding settlement.

Bargaining

Process of intergroup conflict resolution where representatives reach agreement through direct negotiation.

Primitive Behaviour

Actions or reactions that are considered to be based on early or basic human instincts rather than learned or civilized responses.

Le Bon

Referring to Gustave Le Bon, a French social psychologist known for his work on crowd psychology and the study of mob behavior in the late 19th and early 20th centuries.