1. According to the theory of comparative advantage: A. some countries have a co
ID: 1135761 • Letter: 1
Question
1. According to the theory of comparative advantage: A. some countries have a comparative advantage in producing every good B. Every country can produce some good with a lower opportunity cost C. Every country should produce goods that involve high opportunity costs D. Some countries should import every good from other countries2.The theory of comparative advantage is: A. Not true for nations, though it may be true for individuals B. Rarely relevant for identifying weather gains form trade can be obtained C. True for nations, but it is not true for business or individuals D. Always relevant for identifying weather gains from trade can be obtained
1. According to the theory of comparative advantage: A. some countries have a comparative advantage in producing every good B. Every country can produce some good with a lower opportunity cost C. Every country should produce goods that involve high opportunity costs D. Some countries should import every good from other countries
2.The theory of comparative advantage is: A. Not true for nations, though it may be true for individuals B. Rarely relevant for identifying weather gains form trade can be obtained C. True for nations, but it is not true for business or individuals D. Always relevant for identifying weather gains from trade can be obtained
A. some countries have a comparative advantage in producing every good B. Every country can produce some good with a lower opportunity cost C. Every country should produce goods that involve high opportunity costs D. Some countries should import every good from other countries
2.The theory of comparative advantage is: A. Not true for nations, though it may be true for individuals B. Rarely relevant for identifying weather gains form trade can be obtained C. True for nations, but it is not true for business or individuals D. Always relevant for identifying weather gains from trade can be obtained
Explanation / Answer
Answer
1) The correct answer is (B) Every country can produce some good with a lower opportunity cost
According to comparative advantage A country, indiviual etc export those goods that have lower opportunity cost than other and inport that good that has either opportunity cost than other. For example If there are 2 countries A and B and 2 goods X and Y. If A has lower opportunity cost that B in Producing X then B definitely has lower opportunity cost than A in Producing Y.
Hence The correct answer is (B) Every country can produce some good with a lower opportunity cost
2) The correct answer is (D) Always relevant for identifying weather gains from trade can be obtained.
This is the BackBone of the theory of Trade. As discussed in part 1 that Every country definitely can produce some good at a lower opportunity cost, The country that has lower opportunity cost in produnig good wll import that export and the country that has higher opportunity cost will import that good.
Hence This theory of comparative advantage is Always relevant for identifying weather gains from trade can be obtained.
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