Question

true/false. The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Answer 1

True.

If Loneland were to allow free trade, it would be able to import beef from other countries at a cheaper rate (2 pounds of cheese for 2 pounds of beef), and export its own cheese to other countries at a higher rate (3 pounds of cheese for 2 pounds of beef). In other words, Loneland would have a comparative advantage in producing cheese, and would benefit from specializing in cheese production and exporting it in exchange for other goods.