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61) Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?

A) an outcome in which wages are roughly equal around the world

B) an outcome in which the standard of living is roughly equal around the world

C) an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement

D) an outcome in which resources are devoted to their most efficient use

 

 

 

62) Based on the above figure, if countries "A" and "B" faced the production possibilities curves above, both countries would benefit if

A) they did not trade.

B) "A" produced industrial goods, and "B" produced agricultural goods.

C) "B" produced industrial goods, and "A" produced agricultural goods.

D) they both produced both industrial and agricultural goods.

 

63) According to the concept of comparative advantage, a good should be produced in that nation in which

A) domestic opportunity cost is greatest.

B) domestic opportunity cost is the smallest.

C) money is used.

D) terms of trade are maximized.

64) International trade between two nations increases the standard of living of both nations due to

A) specialization and gains from absolute advantage.

B) specialization and gains from comparative advantage.

C) high tariffs.

D) political intervention.

 

65) Distinguish the concepts of comparative advantage and absolute advantage.

 

66) What is the "division of labor"? How is the division of labor related to production?

 

 

 

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