Asked by Julio Cesar Meirelles on May 12, 2024
Verified
Which of the following statements is true?
A) Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it.
B) Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
C) Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product.
D) Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.
Comparative Advantage
The knack of entities, whether they are people, companies, or countries, to bring forth goods or services at opportunity costs that undercut those of competitors.
Opportunity Costs
Opportunity Costs represent the benefits that are foregone by choosing one option over an alternative one.
Specialization
The focus by an individual, firm, or country on producing a limited range of goods or services, often to improve efficiency and productivity.
- Implement the concept of comparative advantage to analyze trade structures between countries.
- Assess the repercussions of specialization and trade on national production and consumption dynamics.
Verified Answer
Learning Objectives
- Implement the concept of comparative advantage to analyze trade structures between countries.
- Assess the repercussions of specialization and trade on national production and consumption dynamics.
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