Comparative Advantage and Trade Quiz

Who has the absolute advantage in producing charms?

• Kalos

• Both have equal advantage

• Johto

• Neither has an advantage

Answer explanation

Johto has the absolute advantage in producing charms, as indicated by the correct answer choice. This means Johto can produce charms more efficiently or at a lower opportunity cost compared to Kalos.

What is the opportunity cost in Kalos for producing one charm?

• 0.5 berries per charm

• 1 berry per charm

• 3 berries per charm

• 2 berries per charm

Answer explanation

The opportunity cost in Kalos for producing one charm is 2 berries per charm, as stated in the correct answer choice.

Which country has the comparative advantage in producing berries?

• Kalos

• Johto

• Both equally

• Neither

Answer explanation

Johto has the comparative advantage in producing berries, as indicated by the correct answer choice.

If Kalos and Johto specialize based on comparative advantage, who would produce charms?

• Kalos

• Johto

• Both

• Neither

Answer explanation

Kalos would produce charms because it specializes based on comparative advantage, making it the most efficient producer of charms.

What would be a fair trading price of charms in terms of berries that benefits both Kalos and Johto?

• 3 berries per charm

• 2 berries per charm

• 1 berry per charm

• 2.5 berries per charm

Answer explanation

The fair trading price that benefits both Kalos and Johto would be 2.5 berries per charm, as it is a balanced value between 3 berries and 2 berries per charm.

What is the opportunity cost of producing charms in Johto?

• 1 berry per charm

• 2 berries per charm

• 4 berries per charm

• 3 berries per charm

Answer explanation

The opportunity cost of producing charms in Johto is 3 berries per charm, as indicated in the correct answer choice.

Which country should produce berries to maximize efficiency based on comparative advantage?

• Neither should produce berries

• Johto

• Kalos

• Both should produce equally

Answer explanation

Johto should produce berries to maximize efficiency based on comparative advantage.

What is the opportunity cost of producing one berry in Kalos?

• 0.5 charms per berry

• 1 charm per berry

• 2 charms per berry

• 1.5 charms per berry

Answer explanation

The opportunity cost of producing one berry in Kalos is 0.5 charms per berry, as it represents the value of the next best alternative foregone.