Asked by Hunter Ardemagni on May 18, 2024
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The principle of comparative advantage
A) applies only when the gold standard is in effect.
B) is the basic reason that the United States has been running trade deficits.
C) states that it is advantageous to export more than you import.
D) states that total output is greatest when each product is made by the country that has the lowest opportunity cost.
Comparative Advantage
Comparative Advantage is an economic theory suggesting that countries should produce and export goods for which they have a lower opportunity cost compared to other countries.
Opportunity Cost
The forgone value of what you give up when you make a choice.
Total Output
The aggregate quantity of goods and services produced within an economy over a specific period, reflecting the economy's overall productivity.
- Understand the principles of international trade and the theory of comparative advantage.
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Learning Objectives
- Understand the principles of international trade and the theory of comparative advantage.
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