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According to Ricardo, a country will have a comparative advantage in the product in which itsA) labor productivity is relatively low.B) labor productivity is relatively high.C) labor mobility is relatively low.D) labor mobility is relatively high.E) labor is outsourced to neighboring countries.

Question

According to Ricardo, a country will have a comparative advantage in the product in which itsA) labor productivity is relatively low.B) labor productivity is relatively high.C) labor mobility is relatively low.D) labor mobility is relatively high.E) labor is outsourced to neighboring countries.

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Solution

To determine the answer to this question, we need to understand Ricardo's theory of comparative advantage. According to Ricardo, a country will have a comparative advantage in the product in which its labor productivity is relatively high.

Step 1: Understand the concept of comparative advantage Comparative advantage refers to a country's ability to produce a particular good or service at a lower opportunity cost compared to other countries. It is based on the idea that countries should specialize in producing goods or services in which they have a lower opportunity cost, and then trade with other countries to maximize overall production and consumption.

Step 2: Analyze the options A) labor productivity is relatively low. If a country's labor productivity is low, it means that it takes more time and effort for the country to produce a certain amount of goods or services. This would not give the country a comparative advantage.

B) labor productivity is relatively high. If a country's labor productivity is high, it means that it can produce a larger quantity of goods or services in a given amount of time compared to other countries. This would give the country a comparative advantage.

C) labor mobility is relatively low. Labor mobility refers to the ease with which workers can move between different jobs or industries. It is not directly related to a country's comparative advantage in a specific product.

D) labor mobility is relatively high. Similarly to option C, labor mobility is not directly related to a country's comparative advantage in a specific product.

E) labor is outsourced to neighboring countries. Outsourcing labor to neighboring countries may affect a country's production costs and efficiency, but it does not necessarily determine its comparative advantage in a specific product.

Step 3: Determine the correct answer Based on Ricardo's theory of comparative advantage, the correct answer is B) labor productivity is relatively high. A country with high labor productivity can produce goods or services more efficiently, giving it a comparative advantage in that product.

Therefore, the country will have a comparative advantage in the product in which its labor productivity is relatively high.

This problem has been solved

Similar Questions

A country engaging in trade according to the principles of comparative advantage gains fromtrade because itA) is producing exports indirectly more efficiently than it could alternatively.B) is producing imports indirectly more efficiently than it could domestically.C) is producing exports using fewer labor units.D) is producing imports indirectly using more labor units.E) is producing exports while outsourcing services.

Productivity grows more quickly when countries produce goods and services in which they are of ________ advantage.

A country has an absolute advantage in the production of a product when it:Select one:a.Has access to the raw materials needed to produce the product.b.Has the capability to produce the product within its boundaries.c.Has the largest domestic demand for the product.d.Is more efficient than any other country in producing it.Clear my choice

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

_______ holds that there are advantages to trade because different countries can produce different goods more efficiently than others.

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