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.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fba1016a5-5d52-488f-b8df-82579595a353%2F986fc673-1387-4baa-9ca8-e412af2d98b3%2F29rvny_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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.
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