Gains From Trade and the Benefit of Specialization


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The United States can produce 20 strawberries or 80 apples, while Canada can produce 15 strawberries or 5 apples. Which of the following describes what will happen if these two countries trade with each other?

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1. According to the two production possibility curves shown, Country A should specialize in the production of which of the following?

2. When countries specialize in the goods in which they have a comparative advantage, which of the following is true?

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About This Quiz & Worksheet

This lesson focuses on how an understanding of the theory of comparative advantage can influence our position on how a nation trades. This quiz and worksheet will help you test your understanding of how and why nations trade. These practice questions will test how well you understand the concept of comparative advantage and how nations trade.

Quiz & Worksheet Goals

In these assessments, you'll be tested on:

  • Comparative advantages
  • How to assess sample trade scenarios
  • How to decide how a given country should trade
  • Evaluating the benefits specialization and exchanged

Skills Practiced

This quiz and worksheet will allow you to test the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on international trading and its motivating principles
  • Making connections - use your understanding of opportunity cost to better grasp the concept of specialization
  • Problem solving - use acquired knowledge to solve practice problems covering trade scenarios
  • Defining key concepts - ensure that you can accurately define main ideas, such as the types of advantages and the benefits of specialization

Additional Learning

To learn more about international trade, review the accompanying lesson entitled Gains From Trade and the Benefit of Specialization. The related lesson covers the following objectives:

  • Define the theory of comparative advantage
  • Differentiate between comparative advantage and absolute advantage
  • Understand specialization and its benefits
  • Define the benefits of specialization