Which of the following describes comparative advantage? A) To ...

[clippers!]

Which of the following describes comparative advantage?
 
  A) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.
  B) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day.
  C) Firm A can produce a good at a cost of 3 and Firm B can produce the good at a cost of 4.
  D) Jane can type 50 words per minute and Joe can type 60 words per minute.

Question 2

Assume a small nation has the following statistics: its consumption expenditure is 15 million, investment is 2 million, government expenditure on goods and services is 1 million, exports of goods and services to foreigners is 1 million, and
 
  imports of goods and services from foreigners is 1.5 million. Calculate this nation's GDP.

[manuelcastillo]

Answer to Question 1

A

Answer to Question 2

The nation's GDP equals the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services, where net exports of goods and services equals of goods and services exports minus imports of goods and services. So, GDP = 15 million + 2 million + 1 million + 1 million - 1.5 million = 17.5 million.