1. To say that countries gain from trade means that: A.Trade is a zero-sum game

Question

1. To say that countries gain from trade means that:     
A.Trade is a zero-sum game (that is, if one country gains, the gain must lead to an equal loss in another country).
B.If one country has an absolute advantage over another in producing all goods, then only that country will benefit from trade.
C.Countries can potentially consume beyond their production possibilities curve if they trade with one another.
D. Small countries always gain more than large countries in international trade.

Is C the correct answer?

2. Computer game cartridges produced in EconomyLand sell for $50 each. The same cartridges made in MarketLand sell for $100. If free trade were allowed, we would expect the prices in both countries to:     
A.Converge to somewhere between $50 and $100.
B.Move to the higher price of $100.
C.Move to the lower price of $50.
D.Remain unchanged.

Is it A or B?

3.Which of the following is NOT an example of a barrier to trade?     
A.Tariffs.
B.Quotas.
C.High price of energy.
D.Certain licensing and health requirements for imported goods.

Is it B or C?

Explanation / Answer

1)Yes

2)A

3)C

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