The theory of comparative advantage suggests that countries should specialize in producing goods or services in which they have:Question 45Answera.Lower opportunity costsb.Higher opportunity costsc.Equal opportunity costsd.No opportunity costs
Question
The theory of comparative advantage suggests that countries should specialize in producing goods or services in which they have:Question 45Answera.Lower opportunity costsb.Higher opportunity costsc.Equal opportunity costsd.No opportunity costs
Solution
The theory of comparative advantage suggests that countries should specialize in producing goods or services in which they have:
a. Lower opportunity costs
This is because the theory of comparative advantage is all about maximizing efficiency. When a country specializes in producing goods or services for which it has a lower opportunity cost, it means that it gives up less to produce each unit of that good or service than it would if it were to produce other goods or services. This allows the country to produce more of what it's good at, which can then be traded for goods and services that other countries produce more efficiently.
Similar Questions
The theory of comparative advantage demonstrates that even if a country is less efficient than another in producing all goods, it can still benefit from trade by specializing in the production of the good in which it has: A. The highest absolute advantage B. The lowest opportunity cost C. The highest total production D. The lowest absolute cost
In general, when there is free trade and nations produce and export goods and services for which they have comparative advantage, the global economy is better off.Absolute Advantage means that one nation (or individual) can produce more of a good or service than another. Another way of looking at it is to say that one nation (or individual) can produce a good or service using fewer inputs than another uses.Comparative Advantage, in contrast, looks at the opportunity cost a nation (or individual) experiences when producing a good. When one item is produced, something else is given up – but how much? For example, if a nation produces only pickup trucks and pineapples, comparative advantage depends on how many pickup trucks are given up to produce a unit of pineapples, and vice versa. Comparative advantage helps us determine whether it is beneficial for two nations or individuals to specialize and trade.
advantage occurs when a country has a cost advantage in a good over another producing country.
What kind of advantage comes from a country producing a good at a lower opportunity cost than another country is able to do?Multiple choice question.AbsoluteRelativeComparativeOpportunity
When two countries with different opportunity costs engage in trade based on comparative advantage, the result is: A. Both countries experiencing increased production and consumption B. Both countries producing only goods they have an absolute advantage in C. Both countries experiencing decreased production D. Both countries producing the same goods
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