QuestionIChoice

1.Use the following chart to answer questions (1) - (3).

Suppose that labor can produce flowers or candy in the US and Sweden. Below is the chart that indicates how much 1 hour of labor can produce if it specializes in a particular good.

	Flowers	Candy
United States	20	120
Sweden	10	30

(1)Which of the following istrue?

1. US has an absolute advantage inflowers.
2. Sweden has a comparative advantage inflowers.
3. Sweden has a comparative advantage incandy.
4. Both (a) and (b).
5. None of the above.

(2) Both countries would benefit if

1. US produced both commodities and did not trade withSweden.
2. Sweden produced both commodities and did not trade with the US.
3. the United States exported candy and importedflowers.
4. the United States exported flowers and importedcandy.
5. None of the above.
   1. 5

(3)There would be no international exchange rate that would permit mutually beneficial exchange between the US and Sweden if the output/labor for candy in Sweden was , instead of30:

1. 10
2. 60
3. 120
4. 200

2. Suppose that Austria and Belgium have the unit labor requirements for producing steel and brooms shown in the table at the right. Then

1.