Exam 17: B: International Trade

The graph below shows the production possibility curves for two hypothetical nations, Orin and Pohl, which each make two hypothetical products, jaxs and keps.Which of the following statements is correct?

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are, 60X and 40Y.Refer to the above information.Alpha should specialize in Y and Beta in X.

Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product.S_d + Q is the product supply curve after an import quota is imposed.A tariff of P_cP_t or an import quota of wy will:

According to the principle of comparative advantage, worldwide output and consumption levels will be highest when goods are produced in nations where:

International trade based on the principle of comparative advantage creates a more efficient allocation of world economic resources.

The World Trade Organization was established by Canada to advocate strategic trade policy.

Refer to the above diagram pertaining to two nations and a specific product.In equilibrium, the nation represented by lines FA and FC will:

The principle of comparative advantage is that total output will be greatest when each good is produced by that nation which has the lowest domestic opportunity cost.