If a country exports the good that it can produce at a low opportunity cost and imports those goods that it would otherwise produce at a high opportunity cost, we say that such trade is based on: the theory of absolute advantage.the arbitrage pricing theory.theory of factor endowments.the theory of comparative advantage. Suppose that under autarky, wheat costs 5 dollar per bushel in the U.S. and 9 dollar per bushel in the Rest of the World. After the opening of free trade between the U.S. and the Rest of the World at a world price of $6 per bushel: neither the U.S. nor the Rest of the World gain from trade.both countries gain from trade, but the U.S. gains more than the Rest of the World.both countries gain from trade, but the Rest of the World gains more than the U.S.the net change in national welfare in the U.S. is zero but the Rest of the World gains. Which of the following can help explain the rise of intra-industry trade?Recent recessions and increase in the price of oil have led to lower national income levels.The demand for product variety has increased substantially over time.Countries widely vary in terms of their resource endowments.The developed nations have recently implemented more conservative fiscal policies. Which of the following features does a common market not have? Common set of external tariffsFree trade among its membersHarmonization of all economic policiesFree movement of factors of production The net loss from trade diversion for a country A that is forming a trade union with country B is likely to be smaller if: country A’s supply curve is very steep.country A’s tariff rate on the product is higher.the good can be produced at relatively lower cost in B than in the outside world.B’s export price is closer to the tariff-inclusive price...