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

Economic theory suggest which of the following is true regarding comparative advantage and absolute advantage?Question 9Select one:a.when a country has an absolute advantage in producing two goods, it will also have a comparative advantage in producing those goods.b.a country gains economically if it concentrates its efforts in those economic activities where it has the greatest advantage or the least disadvantage, and then trades with other countries for those goods it doesn’t.c.a country with an absolute advantage in producing all goods will be better off by producing all goods in equal quantity.d.comparative advantage has nothing to do with determining what a country should produce.e.comparative and absolute advantage mean the same thing in international trade.

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.

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

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

Absolute advantage is:Question 14Select one:a.A tax on imported goods.b.The value of merchandise exports minus the value of merchandise imports.c.When an individual, region, or nation is relatively superior in producing certain goods because of lower opportunity costs, and gains by trading for goods that another is relatively more proficient at producing.d.The ability to produce a greater physical output with a given set of resources than a similar set of resources can produce somewhere else.e.when a country places a limit on the amount of a commodity that can be imported.