Asked by Kaitlyn Wallace on Apr 25, 2024
Verified
If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B,
A) mutually advantageous specialization and trade between A and B may still be possible.
B) we can conclude that A is an industrially advanced economy and B is a developing economy.
C) it will necessarily be advantageous for B to import both X and Y from A.
D) then there is no possible basis for mutually advantageous specialization and trade between A and B.
Mutually Advantageous
A situation or agreement that benefits all parties involved.
Absolute Amounts
Quantities that are measured without any comparison or relation to other quantities, often referring to totals in financial contexts.
- Master the initial principles of international trade along with the concept of comparative advantage.
- Understanding the basis and limits for mutually beneficial trade between nations.
Verified Answer
RS
Rabeya Sultana6 days ago
Final Answer :
A
Explanation :
The concept of comparative advantage explains that even if one country can produce all goods more efficiently than another, there can still be a basis for mutual trade. This is because the countries can benefit from specializing in the production of goods for which they have the greatest relative efficiency or the smallest relative inefficiency, and then trading.
Learning Objectives
- Master the initial principles of international trade along with the concept of comparative advantage.
- Understanding the basis and limits for mutually beneficial trade between nations.
Related questions
If a Nation Has a Comparative Advantage in the Production ...
Countries Engaged in International Trade Specialize in Production Based on ...
In Order for Mutually Beneficial Trade to Occur Between Two ...
If Nations Trade on the Basis of Comparative Advantage ...
Suppose That Labor Is the Only Productive Resource Needed ...