Asked by Prmeeti Verma on May 21, 2024
Verified
If nations trade on the basis of comparative advantage
A) a nation can gain only at the expense of trading partners.
B) exporting nations gain and importing nations lose.
C) importing nations gain and exporting nations lose.
D) all trading partners mutually gain.
Comparative Advantage
Economic theory suggesting that a party should specialize in producing and trading goods that it can produce at a lower opportunity cost than others, leading to increased efficiency and profit.
Trading Partners
Countries or entities that engage in the exchange of goods and services through import and export activities.
- Gain an understanding of the principles underlying international trading and the comparative advantage theory.
Verified Answer
AF
Alexia FlowersMay 25, 2024
Final Answer :
D
Explanation :
Comparative advantage allows for all trading partners to mutually gain because it promotes specialization in goods and services in which each country is the most efficient, leading to increased efficiency and productivity overall. This allows for greater overall output and lower costs for all countries involved, leading to mutually beneficial gains from trade.
Learning Objectives
- Gain an understanding of the principles underlying international trading and the comparative advantage theory.
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