State what the theory of comparative advantage forecasts: When there are two countries A and B, and two goods are produced by them: good X and Y. a) Trade between A and B will only take place if both countries are at a comparatively similar stage in the development of their economies. b) Trade can take place even if country A has an absolute advantage in both providing that B chooses to specialize in the good in which it has the least comparative disadvantage, and A specializes in the one in which it has the greater comparative advantage. c) Trade can only take place if country A has an absolute advantage in producing one of the goods, and country B has an absolute advantage in producing the other. d) None of the above.

State what the theory of comparative advantage forecasts: When there are two countries A and B, and two goods are produced by them: good X and Y. a) Trade between A and B will only take place if both countries are at a comparatively similar stage in the development of their economies. b) Trade can take place even if country A has an absolute advantage in both providing that B chooses to specialize in the good in which it has the least comparative disadvantage, and A specializes in the one in which it has the greater comparative advantage. c) Trade can only take place if country A has an absolute advantage in producing one of the goods, and country B has an absolute advantage in producing the other. d) None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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