Author Question: Prior to international trade, the price of good X is lower in country A than in country B. This ... (Read 139 times)

pepyto · **on:** Jun 29, 2018

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

A) country B has an absolute advantage in the production of product X.
B) country B has a comparative advantage in the production of product X.
C) country A has an absolute advantage in the production of product X.
D) country A has a comparative advantage in the production of product X.

Question 2

A good with a horizontal demand curve has a demand

A) with an income elasticity of demand equal to 0.
B) with a price elasticity of demand equal to 0.
C) with a price elasticity of demand equal to infinity.
D) for which there are no substitutes.