As per Ricardo, a nation has a comparative advantage in the production of a commodity in which it has Select one: a) Greater disadvantage b) Lesser disadvantage c) Greater advantage d) Lesser advantage e) Equal advantage
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As per Ricardo, a nation has a
Select one:
a) Greater disadvantage
b) Lesser disadvantage
c) Greater advantage
d) Lesser advantage
e) Equal advantage
Step by step
Solved in 3 steps
- According to the principle of comparative advantage, - countries should specialize in the production of goods for which they use more resources than their trading partners - countries with a comparative advantage in the production of every good need not specialize - countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners - countries should specialize in the production of goods for which they use fewer resources than their trading partnersIf a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods. True FalseComparative advantage does not address Question 10 options: whether specialization and trade benefit more than one party to a trade. whether absolute advantage or comparative advantage that really matters. how are the gains from trade shared among the parties to a trade. whether it possible for specialization and trade to increase total output of traded goods.
- An examination of the Ricardian model of comparative advantage yields the clear result that trade is (potentially) beneficial for each of the two trading partners since it allows for an expanded consumption choice for each. However, for the world as a whole the expansion of production of one product must involve a decrease in the availability of the other, so that it is not clear that trade is better for the world as a whole as compared to an initial situation of non-trade (but efficient production in each country ?Ecuador’s biggest export is crude petroleum (unprocessed), 63% of which it exports to the United States, and Ecuador’s biggest import is refined petroleum (processed), of which it imports 70% from the United States. Based on this information, which of the following statements is true? Group of answer choices Ecuador has comparative advantage in extracting crude petroleum; the US has comparative advantage in producing refined petroleum. Not enough information. The US has comparative advantage in extracting crude petroleum; Ecuador has comparative advantage in producing refined petroleum. Ecuador has absolute advantage in extracting crude petroleum and the US has absolute advantage in producing refined petroleum.The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is a) an expansion in capital investment resulting from a reallocation of resources away from consumption b) a larger output resulting from a more efficient use of resources c) greater equality of income resulting from an increase in the number of workers d) an increase in the profitability of the business enterprises resulting from an increase in capital formation
- Explain, with a two-country, two-good model, why the Heckscher-Ohlin model predicts only partial specialisation in the production of two goods, while Ricardo's comparative advantage model predicts full specialisation when opening up to international trade. You can opt to present your explanation with the aid of diagrams."The Heckscher-Ohlin Model suggests that the basis of comparative advantage lies primarily in a difference in factor endowments between countries, and that if countries enter into international trade based on that comparative advantage, they will be better off compared to other theories." Discuss this statementWhen a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.
- If the United States produces 8 automobiles and Canada produces 4 automobiles and the United States produces 8 units of lumber and Canada produces 2 units of lumber, which country has comparative advantage,if any, in producing automobiles?The United States has a comparative advantage in the production of wheat, and Haiti has a comparative advantage in the production of sugar. If both countries specialize based on the theory of comparative advantage, Group of answer choices only the production of both goods will increase. the production and consumption of both goods will increase. only the consumption of both goods will increase. only the production of wheat will increase.(Comparative Advantage) Suppose that each US worker can produce 8 units of food or 2 units of clothing daily. In Fredonia, which has the same number of workers, each worker can produce 7 units of food or 1 unit of clothing daily. Why does the US have an absolute advantage in both goods? Which country enjoys a comparative advantage in food? Why?
