2. The Ricardian theory of comparative advantage states that a country has a comparativeadvantage in rice ifA) unit labor requirement of rice is higher in that country compared to unit labor requirement ofrice in other countryB) unit labor requirement of rice is lower in that country compared to unit labor requirement ofrice in other countryC) wage rates in that country are highD) both b and cE) None of the above

10. The Ricardian model of comparative advantage lends support to the argument thatA) trade tends to worsen the conditions of unskilled labor in rich countries.B) trade tends to worsen the conditions of owners of capital in rich countries.C) trade tends to worsen the conditions of workers in poor countries.D) trade tends to worsen the conditions of workers in rich countries.E) trade is mutually beneficial to the countries that engage in it.

7. The Ricardian model attributes the gains from trade associated with the principle of comparativeadvantage result toA) differences in resources.B) differences in technology.C) gravity relationships among countries.D) differences in preferences.

The theory of comparative advantage suggests that countries should specialize in producing goods or services in which they have:Question 45Answera.Lower opportunity costsb.Higher opportunity costsc.Equal opportunity costsd.No opportunity costs

The theory of comparative advantage demonstrates that even if a country is less efficient than another in producing all goods, it can still benefit from trade by specializing in the production of the good in which it has:  A. The highest absolute advantage  B. The lowest opportunity cost  C. The highest total production  D. The lowest absolute cost

Suppose that opportunity costs in India and Thailand are constant. In India, maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Thailand, maximum feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food. It is correct to state thatSelect one:A.India has no comparative advantage in producing cloth or wheat.B.India has a comparative advantage in producing both cloth and wheat.C.Thailand has a comparative advantage in producing cloth.D.India has a comparative advantage in producing cloth.