Asked by Jasleen Sekhon on Jun 24, 2024
Verified
When each person specializes in producing the good in which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.
Comparative Advantage
Comparative Advantage is an economic theory that describes how countries or individuals can gain from trade if they specialize in the production of goods and services for which they have a lower opportunity cost compared to others.
Gain From Trade
The increase in welfare or benefit that countries or entities experience as a result of engaging in voluntary trade with each other.
Total Production
The complete quantity of goods and services produced by an economic entity in a certain period.
- Evaluate the rewards of engaging in specialization and trade for both individual and national levels.
- Learn about the instances where trade can produce positive or negative consequences for individuals or nations.
Verified Answer
KJ
Kimone JonesJun 27, 2024
Final Answer :
False
Explanation :
When each person specializes according to their comparative advantage and then trades, total production in the economy increases because resources are being used more efficiently, leading to an increase in overall output.
Learning Objectives
- Evaluate the rewards of engaging in specialization and trade for both individual and national levels.
- Learn about the instances where trade can produce positive or negative consequences for individuals or nations.