The Absolute advantage theory indicates that a country should engage in the production and exchange of those commodities where it has

Related MCQs

• Country A has 100 units of labor and Country B has 200 units of labor. Both countries produce computers and Web pages. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 Assume free trade exists and that the relative price is such that both countries specialize completely in the industry in which they have a comparative advantage (neither country produces both goods). The supply of computers relative to Web pages will be:
• Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land. Note that wages are the returns to labor and rents are the returns to land. According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B.
• Country A and Country B produce computers and Web sites. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 At which of the following relative prices (computers in terms of Web sites) will Country B produce both goods under free trade?
• Countries H and F operate in an H-O world. Each country produces two goods, A and B. Good A is relatively capital intensive and country F is relatively labor abundant. Suppose however, that the production technology is not the same in the two countries. That is, H has a superior technology of production compared to F.
• The Ricardian theory of comparative advantage states that a country has a comparative advantage in widgets if
• Theory of Absolute advantage is
• Which among the following are the major assumptions of Absolute advantage theory?
• Absolute advantage theory assumes
• In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ____unit labor requirements
• According to ________ even though a country is absolutely disadvantageous in both commodities there is still possibility for trade