The following table summarizes the production relationships Mexico and Guatemala to produce produce tomatoes and beer: Refer to Table 16.1. Which of the following statements is correct? 10) __________ There are no potential gains from trade because Guatemala has an absolute advantage in the production of beer and tomatoes. There are potential gains from trade if: (1) Mexico specializes in the production of tomatoes, (2) Guatemala specializes in the production specializes in the production of beer, and (3)Mexico trades tomatoes to for Guatemala for beer. There are potential gains from trade if; (1) Mexico specializes in the production of beer, (2) Guatemala in the production of tomatoes, and (3) Mexico trades beer to Guatemala for tomatoes. There are no potential gains from trade because has an absolute advantage in the production of beer and Mexico tomatoes. Refer to Table 16.1. Which of the following statements is TRUE? 11) _______ Guatemala has an absolute advantage in producing beer. Guatemala has a comparative advantage in producing beer. Guatemala has a comparative advantage in producing tomatoes. Guatemala has an absolute advantage in producing tomatoes. all of the above. Refer to Table 16.1. Use the following statements to answer this question. 12) _________ Mexico has an absolute advantage in the production of tomatoes and beer. Mexico has a comparative advantage in the production of tomatoes. I is true, and II is false. I is false, and II is true. Both I and II are true. Both I and II are false. A competitive equilibrium is efficient in the production and exchange of two goods X and Y when 13) _______ MRS_xy = MRT_LK (where L = labor input and K = capital input). MRS_xy = MRT_xy. MRS_xy = MRT_LK (where L = labor input and K = capital input) MC_X/MC_Y = P_Y/P_X. If the world price for a good is above a nation's pre-trade equilibrium price, then the nation 14) ________ cannot gain from trade. will import the good. will export the good. will neither export nor import the good. Both c and D.
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