3. International Economics

Comparative Advantage — Quiz

Test your understanding of comparative advantage with 5 practice questions.

Practice Questions

Question 1

What assumption underlies the simple Ricardian model of international trade?

Question 2

Country X can produce 80 units of good A or 40 units of good B per day, while Country Y can produce 30 units of A or 60 units of B. Which country has the comparative advantage in producing good B?

Question 3

What is Country X’s opportunity cost of producing one unit of good B?

Question 4

Which event would shift a country’s production possibility frontier (PPF) outward?

Question 5

Among the following terms of trade (units of A per unit of B), which would be mutually beneficial given Country X’s cost of 2 A per B and Country Y’s cost of 0.5 A per B?