the following statements is NOT correct regarding the gains from trade according
ID: 2804301 • Letter: T
Question
the following statements is NOT correct regarding the gains from trade according to the country eeuld benefit from trade even if it has absolute advantage over another country theory of comparative advantage? A. A B. Quotas and tariffs can offset any gains from trade C. Cost could outweigh the gains from free trade if industries and their labor pools losing out to trades take a long time to adjust or cannot adjust at all D. Comparative advantage is always a zero-sum game (one country's gain is offset by anothers loss)Explanation / Answer
According to Theory of Comparative Advantage, the statement which is NOT correct is that Comparative Advantage is always a Zero-Sum game i.e. one country's gain is offset by another loss.
This is false because the trade is a positive sum game. Both the parties involved in it actually should realise gains for the trade to happen. If one country is aware that it is going to lose by entering in the trade, it will not go for it.
Hence, Option-d is the right answer.
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