10.6

1. 1. Listen to Track 76.

      Now answer the questions.

   1. What is the talk primarily about?

      1. Why absolute advantage is a flawed framework for evaluating international trade
      2. Ways to restrict the expansion of international trade
      3. Lessons learned from history about manufacturing advantages in one country compared with another
      4. The theory of comparative advantage and why it supports international trade

   2. According to the professor, under what circumstances should one country trade with another country?

      1. When costs of trading abroad are high
      2. When one country is more productive generally than another
      3. When one country has significantly more labor power available than another
      4. When one country can make a product more efficiently than another country, relative to a different product

   3. According to the professor, what is the main difference between absolute advantage and comparative advantage?

      1. Comparative advantage involves the relative production efficiency in one country, compared with another country, at making different products.
      2. Comparative advantage involves the production efficiency in one country compared with another at making one specific product.
      3. Comparative advantage only holds when one country is more efficient at making several products than is another country.
      4. Comparative advantage only holds when one country is more efficient at making at least one product than is another country.

   4. What does the professor imply about comparative advantage when there are more than two products available for trade?

      1. Countries will be more likely to not benefit from trade.
      2. Countries will still be able to benefit from international trade in most circumstances.
      3. Trading costs will be higher than when there are only two products available for trade.
      4. Trading costs will be less important than when there are only two products available for trade.

   5. What does the professor imply about the trade example given between Country X and Country Y?

      1. The trading ratio of socks-to-shoes can affect whether trading will be beneficial to both countries.
      2. Both countries will benefit from trade irrespective of the cost of shipping socks and shoes to one another.
      3. Only Country X will benefit from trade because it has an absolute advantage in production.
      4. Only Country Y will benefit from trade because it has an absolute disadvantage in production.

   6. What is the professor’s viewpoint regarding trade protection?

      1. Trade barriers should only be put in place if one country has an absolute advantage over another in production.
      2. Trade protection is valuable in some circumstances—particularly to help people avoid losing their jobs to foreign workers.
      3. He believes that if two countries have economic reasons for trading with one another, trade barriers are harmful to both countries.
      4. He believes that if two countries have economic reasons for trading with one another, trade barriers are harmful only to the country with an absolute advantage in production.