Asked by Trinity McClendon on May 19, 2024
Verified
The United States can gain from international trade if
A) it imports goods for which it is a high-opportunity cost producer and exports those for which it is a low-opportunity cost producer.
B) the dollar appreciates in value.
C) the dollar is overvalued in the currency market.
High-Opportunity Cost
A situation where choosing one option results in the loss of the potential gain from other alternatives.
Low-Opportunity Cost
Refers to a situation where choosing one option results in the smallest possible sacrifice in terms of the value of the next best alternative.
Appreciates
When the value of an asset or currency increases in value in comparison to another currency or benchmark.
- Familiarize oneself with the concepts of specialization and comparative advantage pertinent to global trading activities.
- Distinguish between absolute and comparative advantage in the context of global trade.
Verified Answer
JA
Joshua AquinoMay 24, 2024
Final Answer :
A
Explanation :
International trade allows countries to specialize in producing the goods they can produce most efficiently, which leads to a more efficient allocation of resources and increased output. This is achieved by importing goods for which the country is a high-opportunity cost producer and exporting those for which it is a low-opportunity cost producer, as stated in option A. Options B and C relate to the value of the dollar in the currency market and do not directly relate to the benefits of international trade.
Learning Objectives
- Familiarize oneself with the concepts of specialization and comparative advantage pertinent to global trading activities.
- Distinguish between absolute and comparative advantage in the context of global trade.