The main advantage of trade between two countries is that       A) trade makes both countries more self-sufficient. B) employment in both countries will increase. C) both countries can produce beyond their previous resource and productivity constraints. D) both countries can consume beyond their previous resource and productivity constraints.

Without trade, Jake consumes 20 pounds of green beans and 80 pounds of corn, and Jane consumes 40 pounds of green beans and 40 pounds of corn. If the terms of trade are 1 pound of green beans for 3 pounds of corn, and Jake sells Jane 72 pounds of corn after specialization, then Jake consumes _______ pounds of green beans and _______ pounds of corn.

A person or nation that has a comparative advantage in the production of a good, should A) Specialize in the production of that good B) Have the highest opportunity cost C) Not specialize in the production of that good D)Automatically has an absolute advantage

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desonia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 18 million pounds of grain and 9 million pounds of sugar, as indicated by the grey stars marked with the letter A.           Maldonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR)   , while Desonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR)    . Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two…