ECON201-Quiz 9

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Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area

A + B + C + D + F

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

export copper, since that country has a comparative advantage in copper

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

import copper

Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

is A, decreased by the area B + D

A logical starting point from which the study of international trade begins is

the principle of comparative advantage


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