Complete the statement below.The first limitation of the theory of comparative advantage is that increased    might increase output and lead to rising    costs caused by    of scale.

Complete the lists below to show the assumptions and limitations of the Theory of Comparative Advantage:$$​Assumptions:1. Average costs are   .2. There are no trade   .3. There are no    costs.$$​Limitations:1. Specialisation can cause average costs to increase due to    of scale.2. There are often trade barriers such as   .3. There are real life    costs when trading.

What is an advantage of economies of scale?

For each of the following, explain how it can be a source of comparative advantage and provide an example. a. Abundant inputsb. Specialised skillsc. Mass production

What best describes diseconomies of scale?Cost advantages that larger firms often enjoySavings in costs achieved by increasing the scale of productionThe rising average cost per unit that occurs when a company increases its output beyond a certain levelThe potential profit increase due to economies of scale

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