QUESTION 9 If Pedro can produce more bread in one day than Roger can produce in one day, then a. Pedro has a comparative advantage in the production of bread. Roger has a comparative advantage in the production of bread. b. С. Pedro has an absolute advantage in the production of bread. d. Roger has an absolute advantage in the production of bread. d QUESTION 10 the equilibrium price decreases, and the equilibrium quantity increases the equilibrium price increases, and the effect of quantity is ambiguous the equilibrium price increases, and the equilibrium quantity increases the equilibrium price decreases, and the equilibrium quantity decreases If the demand of soccer balls increases, then a. b. с. d. O O O

If country ABC can produce a unit of good 1 by sacrificing fewer units of good 2 than can country​ XYZ, it is correct to say that country ABC   A. has a comparative advantage in producing good 1.   B. has an absolute advantage in producing good 1.   C. will not wish to trade good 1 with country XYZ.   D. will import good 1.

The graph shows the PPC for a country that can produce coffee or butter. Pounds of coffee (thousands) 3 4 5 6 Pounds of butter (thousands) O True 8 The straight line is the trade line and CPC if production is at Point A. This country has a comparative advantage in coffee. O False h

5. The price of trade Suppose that Poland and Liechtenstein both produce ale and shoes. Poland's opportunity cost of producing a pair of shoes is 5 kegs of ale while Liechtenstein's opportunity cost of producing a pair of shoes is 12 kegs of ale. By comparing the opportunity cost of producing shoes in the two countries, you can tell that production of shoes and has a comparative advantage in the production of ale. has a comparative advantage in the Suppose that Poland and Liechtenstein consider trading shoes and ale with each other. Poland can gain from specialization and trade as long as it receives more than of ale for each pair of shoes it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long as it of shoes for each keg of ale it exports to Poland. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of ale) would allow both Liechtenstein and Poland to gain from trade? Check…