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1. Under Smith's theory of international trade a country will completely specialize in the good it has an absolute advantage in producing.
A) True
B) False
2. According to Ricardo the immediate basis for trade stems from _________________ cost differences between nations.
A) absolute
B) comparitive
3. If in a two-nation, two-product world Country A uses more labor to produce both goods than Country B we say that Country A
A) has an absolute disadvantage in both goods
B) has an absolute advantage in both goods
C) will not participate in international trade
D) will import both goods from Country B
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