Globalization of trade: (A) Is based on comparative advantages (B) Leads to comp
ID: 1126813 • Letter: G
Question
Globalization of trade: (A) Is based on comparative advantages (B) Leads to complete specialization (C) Produces more goods and services for consumption for all parties (D) Could lead to innovation and lower costs (E) All of the above (F) A, C and D Globalization of trade: (A) Is based on comparative advantages (B) Leads to complete specialization (C) Produces more goods and services for consumption for all parties (D) Could lead to innovation and lower costs (E) All of the above (F) A, C and D Globalization of trade: (A) Is based on comparative advantages (B) Leads to complete specialization (C) Produces more goods and services for consumption for all parties (D) Could lead to innovation and lower costs (E) All of the above (F) A, C and DExplanation / Answer
The answer is:- (F)
Globalisation of trade definitely helps in comparative advantage, if two countries trade among eachother, the country which has comparative advantage in good x will produce good x and the country which has advantage in good y will produce good y. Moreover if globalisation in trade takes place, and the country which has comparative advantage in a particular good produce only that good, then the overall consumption will increase as the production will increase due to use of efficient labour and technology needed for producing the product. Moreover if all the economy of the world unite new idea and technology are bound to come in the market, and low cost production will also be invented.
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