a) If everyone had the same opportunity cost of producing a particular good, the
ID: 1247679 • Letter: A
Question
a) If everyone had the same opportunity cost of producing a particular good, then the absolute advantage would beA the same for everyone but the comparative advantage would vary
B everyone would have the same comparative advantage
C everyone would have the same absolute advantage
D no one would have an absolute advantage
E the absolute and comparative advantage would be the same for everyone --------------------------------------------------------------------------------------------------------
b) The principle of comparative advantage explains that even though both nations can gain from trade,
A whether or not the large nation trades with the smaller nation makes little difference to the smaller nation
B whether or not the large nation trades with the smaller nation makes little difference to the superpower
C whether or not the large nation trades with the smaller nation makes a big difference to both nations
D whether or not the large nation trades with the smaller nation makes little difference to either nation
E both nations can also suffer equally if they do not trade
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Explanation / Answer
the third question's answer is: Both the buyer and seller better off this is because neither the buyer or seller would make the transaction if they didn't think it will make them better off