Entry Exam Category: High School Equivalency Exams
Course: HiSET
Exam: HiSET Social Studies Practice Test
Practice Question
Extract
Trade and Opportunity Costs
This passage and table describe the opportunity costs faced by two countries.
1 The countries of Grand Coast and Toland are trading partners. The two main goods
traded are timber and fish. Every year the ministers of trade from each country
attend an international conference to discuss issues related to foreign trade and
decide how each country should specialize. The table provides economic data for
one year.
This passage and table describe the opportunity costs faced by two countries.
1 The countries of Grand Coast and Toland are trading partners. The two main goods
traded are timber and fish. Every year the ministers of trade from each country
attend an international conference to discuss issues related to foreign trade and
decide how each country should specialize. The table provides economic data for
one year.
A drought strikes Toland and decreases the amount of fish caught from 8 units to 2 units. How will this change affect trade negotiations for the following year?
Answer Choices
- A: The countries should maintain the existing agreement.
- B: Both countries should produce both goods.
- C: Toland should specialize in the production of timber.
- D: Toland should specialize in the production of fish.
Correct Answer: C
Rationale: If Toland's fish production drops significantly, it loses its comparative advantage in fish, so it should specialize in timber, where it may still have an advantage.