According to the theory of comparative advantage, trade can benefit A.the exporting country involved in a trade. B.neither country involved in a trade. C.both countries involved in a trade. D.the importing country involved in a trade.

According to the theory of comparative advantage, trade would benefit both the countries that are…

Answered: According to the theory of comparative…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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According to the theory of comparative advantage, trade can benefit

	A.	the exporting country involved in a trade.
	B.	neither country involved in a trade.
	C.	both countries involved in a trade.
	D.	the importing country involved in a trade.

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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