Briefly explain whether you agree with the following argument: \"Unfortunately,

Question

Briefly explain whether you agree with the following argument: "Unfortunately, Bolivia does not have a comparative advantage with respect to the United States in the production of any good or service." (Hint: You do not need any specific information about the economies of Bolivia or the United States to be able to answer this question.) O A. The argument above is reasonable given that Bolivia's GDP is so small relative to the United States. O B. If the US. trades at all with Bolivia, then the argument above is false. There would be no trade unless both countries were made better C Although Bolivia may not have a comparative advantage in the production of any good or service this is not unfortunate because what O D Although Bolivia may not have a comparative advantage in the production of any good or service, this s not unfortunate because what off, and this would imply Bolivia has the comparative advantage in the production of at least one good or service. matters for trade is that it has a competitive advantage. matters for trade is that it has an absolute advantage.

Explanation / Answer

No, the given argument is false if USA trades with Bolivia. Trade only occurs between two countries when each of them has comparative advantage in production of a good. For example, if Bolivia has comparative in production of X and USA has comparative advantage in production of Y, then only these two countries can trade with each other. Having comparative advantage is crucial if trade takes place because if both of the countries aren't better off from trade then they will not trade at all, no matter what the country size is.

Answer- option B

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