Asked by Shubhansh Singh on Jun 07, 2024
Verified
Suppose that labor is the only productive resource needed.Scotland has a comparative advantage in producing firewood,while Iceland has a comparative advantage in producing wool.If the two nations trade with each other,
A) Scotland should export wool and Iceland should export firewood.
B) Scotland should export both wool and firewood.
C) Scotland should export firewood and Iceland should export wool.
D) Iceland should export both wool and firewood.
Comparative Advantage
An economic theory stating that an entity is able to produce goods or services at a lower opportunity cost than others, leading to more efficient trading possibilities.
Producing Firewood
The process of cutting, splitting, drying, and preparing wood to be used as fuel for heating or cooking.
Producing Wool
The process of growing, harvesting, and processing wool fibers from sheep or other animals for use in textile production.
- Acquire knowledge about the basics of international commerce and the theory pertaining to comparative advantage.
- Acquire knowledge on the distinction between absolute and comparative advantage in trading scenarios.
Verified Answer
Learning Objectives
- Acquire knowledge about the basics of international commerce and the theory pertaining to comparative advantage.
- Acquire knowledge on the distinction between absolute and comparative advantage in trading scenarios.
Related questions
Under the Principle of Comparative Advantage Total Output Is Greatest ...
The Principle of Comparative Advantage ...
If Nations Trade on the Basis of Comparative Advantage ...
If a Nation Has a Comparative Advantage in the Production ...
Countries Engaged in International Trade Specialize in Production Based on ...