Comparative Advantage and Measuring Trade
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by Stephanie Foy
| 8 Questions
Note from the author:
GSE International Domain
1
1
Examine the image above.

Based on the image above, which country has the absolute advantage in the production of sugar?
Candonia
Lamponia
It is impossible to tell.
2
1
Use the image above to answer the question.

If the countries above were to specialize and trade, which good should Candonia produce?
sugar
grain
It is impossible to tell.
3
1
When a country can generate more output than another country using the same resources, the country is said to have a(n)
comparative advantage
absolute advantage
production advantage
trade advantage
4
1
When a country can produce a product at a lower opportunity cost than another country, the country is said to have a(n)
comparative advantage
absolute advantage
production advantage
trade advantage
5
1
Trade occurs primarily because
developing countries have cheaper labor.
many countries do not have certain resources.
comparative advantages exist among countries.
trade generates wealth for governments.
6
1
Which of the following best defines the term "balance of trade"?
The value of a country's exports minus the value of the country's imports.
The value of a country's imports minus the value of teh country's exports.
The value of a country's net exports added to consumers spending.
The value of a country's net exports subtracted from consumer spending.
7
1
When the value of a country's exports exceed the value of its imports, then the country has
a budget deficit.
a trade deficit.
a budget surplus.
a trade surplus.
8
1
For a country to have a trade deficit, which of the following would have to be greater?
exports
imports
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