Asked by Jesse Francis on Jun 30, 2024
Verified
The theory of comparative advantage is a powerful argument for protectionism.
Comparative Advantage
The principle that a country, individual, company, or region can produce goods or services at a lower opportunity cost than others, leading to more efficient trade.
Protectionism
Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, aimed at protecting domestic industries.
- Evaluate the role of trade theories in shaping international trade policies.
Verified Answer
WZ
Wenting ZhangJul 02, 2024
Final Answer :
False
Explanation :
The theory of comparative advantage actually argues against protectionism and emphasizes the benefits of free trade between countries. It argues that each country should specialize in producing goods or services that they are relatively better at producing, and then trade with other countries to acquire other goods that they are relatively less efficient at producing. This leads to increased efficiency, lower prices, and greater economic growth. Protectionism, on the other hand, involves erecting barriers to trade, such as tariffs and quotas, which can lead to higher prices, reduced competition, and less innovation.
Learning Objectives
- Evaluate the role of trade theories in shaping international trade policies.
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